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3 Stocks to Buy From the Booming Waste Removal Services Industry
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The Waste Management industry is experiencing positive trends in government regulations, the integration of advanced technologies and a growing awareness of environmental concerns. The sector is capitalizing on increased industrialization and urbanization, coupled with a greater emphasis on improved waste management practices. Per Statista, the global waste management sector reached $1.3 trillion in 2022 and is expected to undergo substantial growth, reaching $2 trillion by 2030. The driving forces behind this expansion include improved waste collection methods and the escalating volumes of waste in emerging markets.
Republic Services, Inc. (RSG - Free Report) , Clean Harbors, Inc. (CLH - Free Report) and Stericycle, Inc. (SRCL - Free Report) are some stocks likely to gain from the above-mentioned factors.
About the Industry
Companies in the Zacks Waste Removal Services industry play a vital role in the collection, treatment and responsible management of diverse waste types, aiming to minimize their impacts on both the environment and public health. This market is categorized into distinct segments based on the kind of waste, including Industrial, Commercial, Domestic and Agricultural waste. The Industrial waste segment has gained significance due to the ongoing industrial expansion, creating a substantial demand for efficient waste management solutions. The market encompasses Collection and Disposal services. The Disposal services segment, primarily fueled by the growing need for waste recycling to mitigate environmental impacts, stands as the primary revenue-generating category.
What's Shaping the Future of the Business Services Industry?
Rising Importance of Environmental, Social and Governance (ESG) Goals: Waste management is a cornerstone of ESG principles, as it allows companies to enhance their ESG ratings by promoting environmental sustainability, fostering social well-being and upholding good governance. Per Grand View Research, the average ESG disclosure score for the waste management industry stands within 50-60%. Embracing responsible waste management meets legal requirements and aligns with consumer and investor desires for sustainable and ethical business practices. In the modern landscape, waste management is not merely a duty but a chance for businesses to showcase their dedication to ESG values, which underpin lasting success and resilience.
Technology Fuels Waste Management Industry Growth: Technology has become a crucial component in waste management, addressing the challenges of waste generation and environmental impacts. This transformative correlation promises a more sustainable future. For instance, artificial intelligence is emerging as a powerful tool to assist in sorting waste and diverting recyclable materials away from landfills. Advancing technology empowers more efficient, eco-friendly waste management, reducing the ecological footprint and promoting sustainability. In a world grappling with waste challenges, technology leads us toward responsible waste management and a cleaner planet.
Innovations in Waste-to-Energy (WTE)Technology: WTE tech transforms waste into energy via methods like incineration or gasification. Per a report by Mordor Intelligence, the Waste-to-Energy Market size is estimated at $38.4 billion in 2024 and is anticipated to reach $65.3 billion by 2029, seeing a CAGR of 11.2%. It is expected to be driven by the rise in the amount of waste generation, growing waste management concerns to meet sustainable living standards and increased focus on non-fossil fuel. The industry, vital in the era of clean energy, offers a renewable energy source and addresses the mounting waste challenge. WTE comprises thermal solutions (pyrolysis, incineration and gasification) and biological solutions (composting and anaerobic digestion), playing a crucial role in sustainable waste management.
Zacks Industry Rank Indicates Encouraging Prospects
The Zacks Waste Removal Services industry, which is housed within the Zacks Business Services sector, currently carries a Zacks Industry Rank #93. This rank places it in the top 37% of 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates a continued outperformance in the near term. Our research shows that the top 50% of Zacks-ranked industries outperforms the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock market performance and current valuation.
Industry Outperforms Sector but Lags S&P 500
The Zacks Staffing Firms industry has underperformed the broader sector and the S&P 500 over the past year.
The industry has gained 21.4% compared with the S&P 500 composite’s growth of 26.9% and the broader sector’s rise of 12.8%.
One-Year Price Performance
Industry's Current Valuation
On the basis of EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used for valuing Waste Removal services stock because of their high debt levels, the industry is currently trading at 12.68X compared with the S&P 500’s 20.12X and the sector’s 28.2X.
Over the past five years, the industry has traded as high as 12.99X and as low as 8.15X, the median being 11.29X, as the charts below show.
EV-to-EBITDA
3 Waste Removal Services Stocks to Keep a Close Eye on
We have presented three stocks that are poised to grow in the near term.
Republic Services: This environmental service provider’s top line is benefiting from organic growth and acquisitions. The company provides top-notch essential services and sustainability offerings that continue to drive customer loyalty and organic growth.
Clean Harbors: This environmental and industrial services provider’s revenues are primarily driven by Technical Services business revenues, and acquisitions of Thompson and HEPACO. The company recorded significant growth in its Safety-Kleen Environmental Services’ revenues, backed by the strength of containerized waste and other core services.
CLH has a Zacks Rank #2 at present. The Zacks Consensus Estimate for 2024 EPS has increased 1.1% in the past 90 days. CLH shares have gained 32.1% in the past six months.
Price and Consensus: CLH
Stericycle: This regulated waste and compliance services provider is riding on organic revenue growth of Regulated Waste and Compliance Services, driven by growth in its hospital customers. Also, the rise in service revenues is backed by a recycling recovery surcharge.
SRCL currently carries a Zacks Rank #2. The Zacks Consensus Estimate for its 2024 bottom line has increased 1% in the past 90 days. SRCL shares have gained 19% in the past six months.
Price and Consensus: SRCL
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3 Stocks to Buy From the Booming Waste Removal Services Industry
The Waste Management industry is experiencing positive trends in government regulations, the integration of advanced technologies and a growing awareness of environmental concerns. The sector is capitalizing on increased industrialization and urbanization, coupled with a greater emphasis on improved waste management practices. Per Statista, the global waste management sector reached $1.3 trillion in 2022 and is expected to undergo substantial growth, reaching $2 trillion by 2030. The driving forces behind this expansion include improved waste collection methods and the escalating volumes of waste in emerging markets.
Republic Services, Inc. (RSG - Free Report) , Clean Harbors, Inc. (CLH - Free Report) and Stericycle, Inc. (SRCL - Free Report) are some stocks likely to gain from the above-mentioned factors.
About the Industry
Companies in the Zacks Waste Removal Services industry play a vital role in the collection, treatment and responsible management of diverse waste types, aiming to minimize their impacts on both the environment and public health. This market is categorized into distinct segments based on the kind of waste, including Industrial, Commercial, Domestic and Agricultural waste. The Industrial waste segment has gained significance due to the ongoing industrial expansion, creating a substantial demand for efficient waste management solutions. The market encompasses Collection and Disposal services. The Disposal services segment, primarily fueled by the growing need for waste recycling to mitigate environmental impacts, stands as the primary revenue-generating category.
What's Shaping the Future of the Business Services Industry?
Rising Importance of Environmental, Social and Governance (ESG) Goals: Waste management is a cornerstone of ESG principles, as it allows companies to enhance their ESG ratings by promoting environmental sustainability, fostering social well-being and upholding good governance. Per Grand View Research, the average ESG disclosure score for the waste management industry stands within 50-60%. Embracing responsible waste management meets legal requirements and aligns with consumer and investor desires for sustainable and ethical business practices. In the modern landscape, waste management is not merely a duty but a chance for businesses to showcase their dedication to ESG values, which underpin lasting success and resilience.
Technology Fuels Waste Management Industry Growth: Technology has become a crucial component in waste management, addressing the challenges of waste generation and environmental impacts. This transformative correlation promises a more sustainable future. For instance, artificial intelligence is emerging as a powerful tool to assist in sorting waste and diverting recyclable materials away from landfills. Advancing technology empowers more efficient, eco-friendly waste management, reducing the ecological footprint and promoting sustainability. In a world grappling with waste challenges, technology leads us toward responsible waste management and a cleaner planet.
Innovations in Waste-to-Energy (WTE)Technology: WTE tech transforms waste into energy via methods like incineration or gasification. Per a report by Mordor Intelligence, the Waste-to-Energy Market size is estimated at $38.4 billion in 2024 and is anticipated to reach $65.3 billion by 2029, seeing a CAGR of 11.2%. It is expected to be driven by the rise in the amount of waste generation, growing waste management concerns to meet sustainable living standards and increased focus on non-fossil fuel. The industry, vital in the era of clean energy, offers a renewable energy source and addresses the mounting waste challenge. WTE comprises thermal solutions (pyrolysis, incineration and gasification) and biological solutions (composting and anaerobic digestion), playing a crucial role in sustainable waste management.
Zacks Industry Rank Indicates Encouraging Prospects
The Zacks Waste Removal Services industry, which is housed within the Zacks Business Services sector, currently carries a Zacks Industry Rank #93. This rank places it in the top 37% of 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates a continued outperformance in the near term. Our research shows that the top 50% of Zacks-ranked industries outperforms the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock market performance and current valuation.
Industry Outperforms Sector but Lags S&P 500
The Zacks Staffing Firms industry has underperformed the broader sector and the S&P 500 over the past year.
The industry has gained 21.4% compared with the S&P 500 composite’s growth of 26.9% and the broader sector’s rise of 12.8%.
One-Year Price Performance
Industry's Current Valuation
On the basis of EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used for valuing Waste Removal services stock because of their high debt levels, the industry is currently trading at 12.68X compared with the S&P 500’s 20.12X and the sector’s 28.2X.
Over the past five years, the industry has traded as high as 12.99X and as low as 8.15X, the median being 11.29X, as the charts below show.
EV-to-EBITDA
3 Waste Removal Services Stocks to Keep a Close Eye on
We have presented three stocks that are poised to grow in the near term.
Republic Services: This environmental service provider’s top line is benefiting from organic growth and acquisitions. The company provides top-notch essential services and sustainability offerings that continue to drive customer loyalty and organic growth.
RSG currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its 2024 bottom line has increased 1% in the past 90 days. RSG shares have gained 19.1% in the past six months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: RSG
Clean Harbors: This environmental and industrial services provider’s revenues are primarily driven by Technical Services business revenues, and acquisitions of Thompson and HEPACO. The company recorded significant growth in its Safety-Kleen Environmental Services’ revenues, backed by the strength of containerized waste and other core services.
CLH has a Zacks Rank #2 at present. The Zacks Consensus Estimate for 2024 EPS has increased 1.1% in the past 90 days. CLH shares have gained 32.1% in the past six months.
Price and Consensus: CLH
Stericycle: This regulated waste and compliance services provider is riding on organic revenue growth of Regulated Waste and Compliance Services, driven by growth in its hospital customers. Also, the rise in service revenues is backed by a recycling recovery surcharge.
SRCL currently carries a Zacks Rank #2. The Zacks Consensus Estimate for its 2024 bottom line has increased 1% in the past 90 days. SRCL shares have gained 19% in the past six months.
Price and Consensus: SRCL