5. Perma-Fix Environmental Services, Inc. (NASDAQ:PESI)
Market cap as of November 22, 2024: $234.41 Million
Number of Hedge Fund Holders: 7
Stock Upside Potential: 48.55%
Perma-Fix Environmental Services, Inc. (NASDAQ:PESI) has affirmed its status as one of the best waste management stocks to buy, going by the 92.34% year-to-date gain. The rally comes on the company confirming its status as a nuclear services company and a leading provider of nuclear and mixed waste management services. Its nuclear waste services include managing and treating radioactive and mixed waste for hospitals, research labs and institutions.
Perma-Fix Environmental Services, Inc. (NASDAQ:PESI) has been flying high as investors react to remarkable growth made possible by the company’s strategic initiatives and operational innovations. The initiatives have established Perma-Fix Environmental Services as a prominent participant in the market and drawn the interest of investors seeking stable returns in the environmental sector.
The stock sentiments have received a significant boost following the successful launch of the company’s commercial Perma-FAS system for destroying PFAS (Per- and Polyfluoroalkyl Substances) at its Florida facility. The system demonstrated over 99.99% effectiveness in breaking down PFAS ‘forever chemicals.’
With several expansion projects underway, such as implementing cutting-edge PFAS technology, Perma-Fix Environmental Services, Inc. (NASDAQ:PESI) is making headway and anticipates big things in the years to come. The company anticipates playing a significant role in waste treatment with a potential revenue stream of 1.5 million gallons annually. Despite the setbacks, Perma-Fix is concentrating on expansion projects like new service procurements, global waste programs, and PFAS technology.
Here is what Long Cast Advisers said about Perma-Fix Environmental Services, Inc. (NASDAQ:PESI) in its first quarter 2024 investor letter:
“MTRX, Perma-Fix Environmental Services, Inc. (NASDAQ:PESI) and QRHC were the biggest contributors to returns in the quarter. During the quarter, we reduced our positions in DAIO and PESI. Same as last quarter, our top five holdings at quarter end were MTRX, CCRD, QRHC, PESI and RSSS, and same as last quarter, our concentrated ownership of these companies means price changes in these stocks will have an overweight impact on our overall portfolio.
Though it remains a top holding, I’ve lightened our position in PESI, hewing to the investment philosophy that one should buy the page 16 story and sell the cover story. Late February saw a Barron’s cover story on PFA’s ie “forever chemicals.” Two weeks later, on PESI’s year-end conference call, the company announced that it had discovered a safe and cost-effective solution for getting rid of them. It’s the kind of announcement that can really get investors’ hearts aflutter.
So why did I sell some? With an R&D budget just $2.5M total over the last four years, it doesn’t seem reasonable that PESI has solved an allegedly $100B issue, or were their solution indeed scalable, how defensible it might be. On the same conf call, the company forecast a paltry 1H24, driven by a gap between the completion of large projects and the beginning of new ones. Anticipating a potentially negative market reaction to this, I wanted to preserve capital to add more shares later.
This short-term investment decision is heavily biased by our recent experience with CCRD, which I did not sell ahead of a well-telegraphed decline in earnings. Maybe I am “fighting the last battle.” Investing is full of uncertainty and best guesses, and every decision is its own hypothesis. In a few weeks, when PESI reports 1Q24 earnings, we will know the outcome. I generally operate under the assumption that doing nothing is usually the best option, and I probably will end up there again, but it made sense at the time. PESI remains a large position commensurate with what I think will be a large long-term opportunity beginning in 2025.”
