Waste management is essential for preventing environmental and health hazards. The COVID-19 pandemic has highlighted the importance of proper medical waste disposal. Furthermore, with the reopening of economies worldwide, the surge in waste generation has driven the demand for waste management services.
Because a manifold increase in residential, commercial, and industrial waste is forecasted with the expected surge in global population in the coming years, the waste management industry is expected to achieve solid growth. The global waste management market size is projected to expand at a 6.2% CAGR from 2022 to 2030.
Therefore, we think quality waste management stocks Waste Connections, Inc. (WCN) and Clean Harbors, Inc. (CLH), which have outperformed the broader market so far this year, could be solid additions to one’s portfolio.
Waste Connections, Inc. (WCN)
Based in Woodbridge, Canada, WCN provides non-hazardous waste collection, transfer, disposal, and resource recovery services in the United States and Canada. It serves more than eight million residential, commercial, and industrial customers in mostly exclusive and secondary markets across 43 states in the U.S. and six provinces in Canada.
On Feb.16, 2022, president and CEO Worthing F. Jackman said, “Proactive pricing, along with a step-up in capital expenditures and over $1 billion in acquisition outlays in 2021, positions us for continued double digit growth in 2022, while preserving the balance sheet strength and flexibility to capitalize on another potential above average year of acquisition activity, investment in sustainability-focused growth projects and increased return of capital to shareholders.”
WCN’s revenues were $1.62 billion for the fourth quarter, ended Dec. 31, 2021, up 16.2% year-over-year. Its net income came in at $166.43 million, up 27.5% year-over-year, while its EPS was $0.64, up 28% year-over-year.
WCN’s revenue is expected to grow 12.5% year-over-year to $8.67 billion in 2022. Its EPS is expected to grow 16.3% to $4.71 in 2022. Also, it surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has gained 3.1% in price year-to-date versus the S&P 500's 3.8% decline.
WCN has an overall B rating, which equates to a Buy in our proprietary rating system.
In addition, it has an A grade for Sentiment and a B grade for Stability and Quality. WCN is ranked #7 of 17 stocks in the A-rated Waste Disposal industry. Click here to see the additional POWR Ratings for WCN (Growth, Value, and Momentum).
Clean Harbors, Inc. (CLH)
CLH provides environmental and industrial services in North America. The Norwell, Mass.-based company operates through two segments: Environmental Services and Safety-Kleen Sustainability Solutions.
On Feb. 23, 2022, Chairman, President, and CEO Alan S. McKim said, “Favorable market dynamics for both our operating segments drove our performance–including high demand for hazardous waste disposal, industrial services and re-refined products.”
CLH’s adjusted net income increased 38.6% in price year-over-year to $48.56 million for the fourth quarter, ended Dec. 31, 2021. Its adjusted EPS was $0.89, up 41.3% year-over-year. Also, its adjusted EBITDA came in at $174.30 million, up 22.9% year-over-year.
Analysts expect CLH’s revenue to be $4.52 billion in its fiscal year 2022, representing an 18.7% year-over-year rise. The company’s EPS is expected to increase 30% per annum for the next five years. Also, it surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 10.7% in price year-to-date.
CLH’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system.
CLH has a B grade for Growth, Value, and Sentiment. It is ranked #3 in the Waste Disposal industry. Click here to see the additional POWR Rating for Momentum, Stability, and Quality for CLH.
WCN shares were trading at $141.94 per share on Tuesday morning, up $1.48 (+1.05%). Year-to-date, WCN has gained 4.36%, versus a -4.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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