5. Clean Harbors, Inc. (NYSE:CLH)
Market cap as of November 7: $14 Billion
Number of Hedge Fund Holders: 37
Clean Harbors, Inc. (NYSE:CLH) is a waste management company that provides environmental and industrial services. Its operations include collecting, transporting, and treating hazardous and nonhazardous waste. It is turning out to be one of the best recycling stocks to buy, going by the 36% year-to-date gain. Record-breaking earnings and revenue growth have been the catalysts for strengthening the company’s sentiments in the market.
Clean Harbors, Inc. (NYSE:CLH) has benefited from high demand for its environmental services because of an aggressive acquisition strategy that has strengthened its long-term prospects. In the third quarter, the company delivered profitable growth in all its operating segments. Consequently, revenue increased 12% year over year to $1.53 billion as net income increased 26% to $115.2 million as reported on October 30, 2024.
Additionally, the third quarter marked the tenth consecutive quarter of margin improvement, affirming why Clean Harbors, Inc. (NYSE:CLH) is one of the best recycling stocks to buy. With the overall demand for its waste management services remaining strong in North America, Clean Harbors should continue to enjoy robust growth and deliver more shareholder value.
Merion Road Capital stated the following regarding Clean Harbors, Inc. (NYSE:CLH) in its first quarter 2024 investor letter:
“During the quarter, I uncharacteristically built a position from nothing into our top holding. Clean Harbors, Inc. (NYSE:CLH) is the largest US hazardous waste management company. Before digging into CLH, I would like to diverge with a bit of personal history. In my early 20’s, I worked at Macquarie Bank, where our team was responsible for acquiring investments on behalf of our managed infrastructure funds and the bank’s balance sheets. One of my first assignments was the acquisition of a publicly traded municipal solid waste (MSW) management company (Waste Industries). While not technically infrastructure per-se, MSW has similar characteristics like being an essential service, operating regional monopolies, and controlling scarce assets. In any case, we paid something like 8-9x EBITDA, which was a premium to the then trading multiple. Waste Industries is now a small part of GFL Environmental, which trades at 12x EBITDA. And GFL is actually at a notable discount to its peers of Waste Management, Republic Services, and Waste Connections, which are at 15x. While hindsight is 20/20, buying into this asset class 15 years ago would have been a home run given their strong cash flow and multiple expansions.
While hazardous waste is not entirely comparable to their MSW brethren, CLH has many attractive attributes. They own and operate scarce assets, including nine incinerators and eight landfills, where new supply is limited by a complex permitting process and significant construction costs. They maintain vertically integrated operations that allow it to control waste from collection through transportation and disposal; this activity similarly requires specialized permits for which the company holds over 500. As the largest player in the space, CLH has a proven history of managing waste properly – a key consideration amongst customers given environmental ramifications. They also have scale benefits that include route-based efficiencies, capacity utilization, and the deepest breadth of service offering…” (Click here to read the full text)
