3. Republic Services, Inc. (NYSE:RSG)
Market cap as of November 7: $64.84 Billion
Number of Hedge Fund Holders: 48
Republic Services, Inc. (NYSE:RSG) is a leading environmental solutions player specializing in solid waste and recycling services. It is involved in the collection and processing of recyclable, solid waste and industrial waste materials. While the stock is up by about 20% for the year, the outperformance comes from investors reacting to the company’s solid underlying fundamentals characterized by strong customer retention and organic revenue growth.
A noteworthy contributor to Republic Services, Inc. (NYSE:RSG)’s strong performance is the Environmental Solutions (ES) segment. This division’s impressive performance demonstrates Republic Services’ strategic focus on expanding its service offerings beyond traditional waste management. Despite volume drops, the Solid Waste (SW) division was able to sustain strong margin performance. This fortitude in the face of difficult market circumstances demonstrates the business’s capacity for cost control and operational effectiveness.
Consequently, Republic Services, Inc. (NYSE:RSG) delivered solid third-quarter results, on October 30, 2024, with revenues increasing 6.5% year over year to $4.1 billion. It also offered a 17.5% year-over-year increase in earnings per share, totaling $1.8. The better-than-expected results came as Republic Services benefited from innovative recycling and waste collection technology. The development of polymer centers and Blue Polymers and advancements in fleet electrification also continued to boost top-line growth.
Republic Services, Inc. (NYSE:RSG) is one of the best recycling stocks to buy, according to analysts, on planning $200 million worth of acquisitions, which is expected to generate up to $834 million in shareholders’ long-term returns. The development of the Las Vegas Polymer Center and an Indianapolis facility is expected to boost earnings next year. The stock continues to return value with a 1.17% dividend yield.
ClearBridge Investments stated the following regarding Republic Services, Inc. (NYSE:RSG) in its Q2 2024 investor letter:
“We added two new names to the portfolio in the quarter. Republic Services, Inc. (NYSE:RSG) is a waste disposal company in the industrial sector whose services include nonhazardous solid waste collection, waste transfer, waste disposal, recycling and energy services. It is a stable-through-the-cycle compounder in a consolidated industry. The company’s end market is resilient, which gives us some confidence in the stability of its earnings through a recession. In the next few years, cash flow should grow at the high end of the range as Republic Services benefits from high-returning sustainability investments in polymer recycling and renewable natural gas, which also improve the company’s emission and circularity profile.
Republic Services continues to set ambitious goals around sustainability targets, such as increasing its renewable energy generation by 50% through the beneficial reuse of biogas. In addition, its 74 recycling centers process five million tons of materials per year and include a major polymers centre for plastics. Notably, it is the first North American waste and recycling company with an emissions reduction goal approved by the Science-Based Targets initiative (SBTi).”
