Amid increased industrialization and urbanization, coupled with rising environmental sustainability concerns and the integration of advanced waste management practices, it is evident that the waste disposal sector is prospering.
Given this backdrop, quality waste disposal stocks Clean Harbors, Inc. (CLH), Ecolab Inc. (ECL), Republic Services, Inc. (RSG), Waste Management, Inc. (WM), and Concrete Pumping Holdings, Inc. (BBCP) could be solid portfolio additions now.
The waste management industry plays an essential role through its dedicated efforts in the gathering, processing, and sound management of several waste types. This sector aims to reduce potential harm to public well-being and our surrounding environment. It remains a mature and stable market, with a steady demand for its services.
Market stability persists despite the rising costs of consumer waste collection driven by corporations and public entities adjusting to labor shortages and higher costs for parts and truck maintenance, all ramifications of the pandemic.
For the third quarter, core prices increased 6.6%, while garbage collection and disposal volumes grew 0.3%. According to the U.S. Bureau of Labor Statistics, garbage and trash collection prices are 6.83% higher in 2023 compared to 2022.
In an era challenged by mounting waste challenges, technology heralds the future of responsible waste management, aiding the preservation of our planet. This technological integration is pivotal for addressing the mounting complexities of waste production and environmental influence. As technology evolves, it fortifies more effective and eco-conscious waste management practices, thereby decreasing ecological harm and fostering sustainability.
The United States Environmental Protection Agency (EPA) recently declared a notable $100 million investment to enhance recycling infrastructure and waste management methods throughout the nation, marking the EPA’s most significant investment toward recycling in 30 years.
The global waste management industry is expected to grow at a 5.4% CAGR by 2030, reaching $1.29 trillion.
With these favorable trends in mind, let's delve into the fundamentals of the five Waste Disposal stock picks, beginning with the fifth choice.
Stock #5: Clean Harbors, Inc. (CLH)
CLH provides industrial and environmental services across North America. The company operates through two segments: Environmental Services and Safety-Kleen Sustainable Solutions (SKSS).
CLH’s trailing-12-month ROCE, ROTC, and ROTA of 17.99%, 7.89%, and 5.79% are 47.1%, 14.4%, and 17.2% higher than the industry averages of 12.23%, 6.90%, and 4.94%, respectively. Its trailing-12-month CAPEX/Sales of 7.71% is 159.4% higher than the 2.97% industry average.
CLH’s revenue rose marginally year-over-year to $1.37 billion in the fiscal third quarter that ended September 30, 2023. Its income from operations stood at $154.37 million. Its adjusted net income and earnings per share came at $91.34 million and $1.68, respectively.
Moreover, its total current liabilities came in at $975.39 million as of September 30, 2023, compared to $1.02 billion for the period that ended December 31, 2022.
Street expects CLH’s revenue and EPS in the fiscal fourth quarter ending December 2023 to increase 6.1% and 18.1% year-over-year to $1.36 billion and $1.70, respectively. It surpassed EPS estimates in three of the trailing four quarters, which is impressive.
The stock has gained 44.6% year-to-date to close the last trading session at $165.03. Over the past year, it has gained 34.6%.
CLH’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CLH has a B grade for Value, Stability, and Quality. It is ranked #5 within the B-rated 14-stock Waste Disposal industry.
For CLH’s additional ratings (Growth, Momentum, and Sentiment), click here.
Stock #4: Ecolab Inc. (ECL)
ECL provides water, hygiene, and infection prevention solutions and services in the United States and internationally. The company operates through Global Industrial, Global Institutional & Specialty, and Global Healthcare & Life Sciences segments.
On October 16, ECL paid a regular quarterly cash dividend of $0.53 per common share. ECL has paid cash dividends on its common stock for 86 consecutive years.
Its annualized dividend rate of $2.12 per share translates to a dividend yield of 1.14% on the current share price. Its four-year average yield is 1.07%. ECL’s dividend payments have grown at CAGRs of 4.1% and 5.3% over the past three and five years, respectively.
On October 3, ECL enhanced its presence in Singapore by opening its new regional office, confirming its commitment and dedication to science and sustainability. This event also showcased its ongoing partnership with Carlton Hotel Singapore.
ECL’s trailing-12-month cash from operations of $2.42 billion is 481.8% higher than the industry average of $415.73 million. Its trailing-12-month gross profit and levered FCF margins of 39.55% and 11.82% are 39.1% and 185.9% higher than the industry averages of 28.43% and 4.13%, respectively.
In the fiscal third quarter that ended September 30, 2023, ECL’s net sales and adjusted gross profit increased 7.9% and 18% year-over-year to $3.96 billion and $1.63 billion, respectively. Moreover, free cash flow stood at $621.20 million, up 154.4% year-over-year.
For the same quarter, adjusted net income attributable to ECL and adjusted EPS stood at $441.70 million and $1.54, up 18.6% and 18.5% from the prior-year quarter, respectively.
Street expects ECL’s revenue and EPS in the fiscal fourth quarter ending December 2023 to increase 7.2% and 21.2% year-over-year to $3.94 billion and $1.54, respectively. The company surpassed consensus EPS estimates in each of the trailing four quarters.
The stock has gained 28.2% year-to-date to close the last trading session at $186.65. Over the past six months, it has gained 11.4%.
ECL’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
ECL has a B grade for Growth, Stability, Sentiment, and Quality. Within the same industry, it is ranked #4.
Click here for ECL’s additional POWR Ratings for Value and Momentum.
Stock #3: Republic Services, Inc. (RSG)
RSG offers environmental services in the United States. It is involved in the collection and processing of recyclable, solid waste, and industrial waste materials; transportation and disposal of non-hazardous and hazardous waste streams; and other environmental solutions.
On November 9, RSG and Blue Polymers, LLC broke ground in Indianapolis on the nation's first innovative plastics recycling complex that will house an RSG Polymer Center and Blue Polymers advanced polymer production facility to advance plastics circularity and supply recycled materials for use in sustainable packaging and other applications. The facilities are expected to open in late 2024.
RSG has returned $670.6 million cash year-to-date to the shareholders, which included $201.1 million of share repurchases and $469.5 million of dividends paid. Its Board of Directors had declared a regular quarterly dividend of $0.535 per share for shareholders, payable on January 16, 2024. It has a record of paying dividends for 19 consecutive years.
Its annualized dividend rate of $2.14 per share translates to a dividend yield of 1.34% on the current share price. Its four-year average yield is 1.54%. RSG’s dividend payments have grown at CAGRs of 7.2% and 7.5% over the past three and five years, respectively.
RSG’s trailing-12-month cash from operations of $3.53 billion is significantly higher than the industry average of $280.10 million. Its trailing-12-month EBIT and EBITDA margins of 18.57% and 28.75% are 91.8% and 109.2% higher than the industry averages of 9.68% and 13.74%, respectively.
In the fiscal third quarter that ended September 30, 2023, RSG’s revenue and operating income increased 6.3% and 9.6% year-over-year to $3.83 billion and $727.80 million, respectively. Moreover, adjusted EBITDA stood at $1.15 billion, up 9% from the year-ago quarter.
For the same quarter, adjusted net income and adjusted earnings per share stood at $488.30 million and $1.54, up 14.8% and 14.9% from the prior-year quarter, respectively.
Street expects RSG’s revenue and EPS in the fiscal fourth quarter ending December 2023 to increase 5.8% and 13.8% year-over-year to $3.73 billion and $1.29, respectively. The company surpassed consensus revenue and EPS estimates in each of the trailing four quarters.
The stock has gained 24% year-to-date to close the last trading session at $160.01. Over the past six months, it has gained 12%.
RSG’s POWR Ratings reflect its solid fundamentals. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
RSG also has a B grade for Stability, Sentiment, and Quality. It is ranked #3 within the same industry.
Beyond what we have highlighted above, one can see RSG’s additional POWR Ratings for Growth, Value, and Momentum here.
Stock #2: Waste Management, Inc. (WM)
WM provides waste management environmental facilities to residential, commercial, industrial, and municipal customers in North America. It offers waste collection and transportation services, material recovery facility (MRF), and owns and operates landfill gas-to-energy facilities and transfer stations.
In November, WM declared a quarterly dividend of $0.70 per share, payable to stockholders on December 15. The company has a record of paying dividends for 21 consecutive years.
Its annualized dividend rate of $2.80 per share translates to a dividend yield of 1.63% on the current share price. Its four-year average yield is 1.70%. WM’s dividend payments have grown at CAGRs of 8.6% each over the past three and five years.
On July 27, WM priced a $2 billion public offering of senior notes, of which 750 million of 4.875% senior notes are due on February 15, 2029, and the remaining $1.25 billion of 4.875% senior notes are due on February 15, 2034.
WM’s trailing-12-month cash from operations of $4.39 billion is significantly higher than the industry average of $280.10 million. Its trailing-12-month net income and EBITDA margins of 11.47% and 28.25% are 89.6% and 105.6% higher than the industry averages of 6.05% and 13.74%, respectively.
In the fiscal third quarter that ended September 30, 2023, WM’s revenues and adjusted income from operations increased 2.4% and 7.6% year-over-year to $5.20 billion and $1.02 billion, respectively.
For the same quarter, its adjusted net income and adjusted per share amount stood at $664 million and $1.63, up 2.9% and 4.5% from the prior-year quarter, respectively. Moreover, adjusted operating EBITDA stood at $1.54 billion, up 6.1% year-over-year.
Street expects WM’s revenue and EPS in the fiscal fourth quarter ending December 2023 to increase 5.3% and 17.8% year-over-year to $5.20 billion and $1.53, respectively.
The stock has gained 9.5% year-to-date to close the last trading session at $171.77. Over the past month, it has gained 10.1%.
WM’s POWR Ratings reflect its solid prospects. The stock has an overall B rating, translating to Buy in our proprietary rating system.
It has a B grade for Stability and Quality. Within the same industry, it is ranked #2.
To see WM’s other ratings for Growth, Value, Momentum, and Sentiment, click here.
Stock #1: Concrete Pumping Holdings, Inc. (BBCP)
BBCP provides concrete pumping and waste management services in the United States and the United Kingdom. The company operates through four segments: U.S. Concrete Pumping; U.K. Operations; U.S. Concrete Waste Management Services; and Corporate.
BBCP’s trailing-12-month CAPEX/Sales of 14.68% is 393.7% higher than the industry average of 2.97%. Its trailing-12-month EBIT and EBITDA margins of 13.91% and 27.37% are 43.6% and 99.2% higher than the industry averages of 9.68% and 13.74%, respectively.
In the fiscal third quarter that ended July 31, 2023, BBCP’s revenue and gross profit increased 15.5% and 18% year-over-year to $120.67 million and $49.48 million, respectively. Its income from operations grew 38.8% from the year-ago quarter to $19.55 million.
For the same quarter, income available to common shareholders and net income per common share stood at $9.90 million and $0.18, respectively. Moreover, adjusted EBITDA stood at $34.92 million, up 16.2% year-over-year.
Street expects BBCP’s revenue in the fiscal fourth quarter ending October 2023 to increase 4.2% year-over-year to $119.70 million. Its EPS is expected to be $0.18. The company surpassed consensus revenue and EPS estimates in three of the trailing four quarters.
The stock has gained 30.6% year-to-date to close the last trading session at $7.64. Over the past six months, it has gained 6.6%.
It’s no surprise that BBCP has an overall A rating, equating to a Strong Buy in our POWR Ratings system.
It has a B grade for Growth, Momentum, Stability, Sentiment, and Quality. It is ranked first in the same industry.
Beyond what is stated above, we’ve also rated BBCP for Value. Get all BBCP ratings here.
What To Do Next?
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WM shares were unchanged in premarket trading Friday. Year-to-date, WM has gained 10.98%, versus a 20.30% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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