10 Best Recycling Stocks to Buy According to Hedge Funds

4. Veralto Corp. (NYSE:VLTO)

Market cap as of November 7: $25.47 Billion

Number of Hedge Fund Holders: 42

Veralto Corp. (NYSE:VLTO) is one of the best recycling stocks to buy, as it is well-positioned to benefit from significant water scarcity, demand for quality water, and digitization. The company has carved a niche in providing water analytics, water treatment, packaging and colour services worldwide.

Likewise, it delivered solid third-quarter results on October 25, 2024, as it benefited from strong demand for industrial water treatment and recovery in the consumer packaged goods market. Consequently, sales were up by 4.7% year over year to $1.31 billion, with Veralto Corp. (NYSE:VLTO) achieving an operating profit margin of 23.4% and net earnings of $219 million. Following the better-than-expected results, the company has raised its full-year guidance with diluted earnings per share expected at between $3.44 and $3.48 from the previous guidance of $3.37 to $3.45.

Additionally, Veralto Corp. (NYSE:VLTO) has completed the acquisition of TraceGains, which is expected to bolster its packaging and colour solutions segment. The acquisition is expected to strengthen the company’s ability to provide greater value to consumer brands by helping digitize critical workflows and accelerate time to market.

The stock is fairly valued with a price-to-earnings multiple of 27, in line with the industrial sector average, while offering a 0.36% dividend yield. Recurring revenue growth, robust core sales growth, and gross margins make it one of the best recycling stocks.

Here is what Aristotle Capital Value Equity Strategy said about Veralto Corporation (NYSE:VLTO) in its Q2 2024 investor letter:

“In the fourth quarter of 2023, we received shares of the water and product quality company Veralto Corporation (NYSE:VLTO) when Danaher, a current Value Equity holding, spun off the business. After further assessing the now independently operated Veralto, we decided to exit our position. We believe our other holdings within the water value chain, including Xylem, American Water Works (our most recent purchase) and to some extent Ecolab, are more optimal investments.”