12 Best Waste Management Stocks to Buy Now

Published on November 9, 2023 at 3:27 am by Hamna Asim in Hedge Funds, News

In this article, we discuss 12 best waste management stocks to buy now. If you want to skip our detailed discussion on the waste management industry, head directly to 5 Best Waste Management Stocks to Buy Now.

The waste management industry faced notable changes due to the impact of COVID-19. One major shift was seen in the composition of waste generated. During lockdowns, residential areas produced more waste compared to industrial and commercial centers, where many offices and industries experienced partial or complete closures, resulting in reduced waste production. On the other hand, hazardous waste generation increased, particularly from the pharmaceutical and medical sectors. This surge in hazardous waste strained the treatment capacity in developing countries, leading to stockpiling and potentially insufficient disposal. Additionally, there was a significant rise in municipal waste, placing immense pressure on existing waste collection and disposal systems. A decrease in recycling activities also increased the challenges associated with managing municipal waste effectively.

Global Market Insights reported that solid waste generation has been affected by extensive urban migration, resulting in increased demand for an efficient solid waste management framework that prioritizes public security and economic development. Both public and private sectors have actively contributed to creating functional waste systems that promote waste reduction, reuse, and source separation, which has complemented the implementation of solid waste management systems. The Municipal Solid Waste Management market is expected to grow 2% by 2032. Opportunities for investment in climate change projects are emerging as solid waste is used to generate renewable energy, further driving industry expansion. With a continued focus on effective waste treatment, disposal methods, and growing concerns about environmental security, the business outlook for the period from 2023 to 2032 is promising.

The global solid waste management market is influenced by the limited presence of major suppliers operating directly across specific regions, leading to the outsourcing of services. This outsourcing allows buyers to benefit from different services offered by service providers, fostering market growth. In terms of end users, the solid waste management industry serves sectors like pharmaceuticals, personal products, breweries, distilleries, and food and beverage companies.

Recent trends in the solid waste management market include anaerobic organic waste breakdown, a push for zero waste, innovative packaging, and technology-driven waste separation, all contributing to market expansion. The global solid waste management market is closely linked to the broader waste management market, which reached nearly $449.26 billion in value in 2023. Factors like the development of smart cities and the increasing adoption of integrated waste management systems support the market. The global waste management market is expected to grow at a compound annual growth rate of 7% from 2024 to 2032. Key regional markets for solid waste management include Asia Pacific, Europe, North America, Latin America, the Middle East, and Africa. The Asia Pacific is the leading market in this sector. China, which was a significant importer of recyclable plastic, has imposed a ban on 24 waste materials, affecting major exporting countries. This change encourages local players to enhance their recycling capabilities and compete with domestic counterparts. In the Asia Pacific, the adoption of integrated waste management and a shift from the collect-and-dispose model is reducing operational costs, while government regulations and technological advancements further drive market growth in the region.

It is expected that the global liquid waste management market size would increase at a compound annual growth rate of 2.3% during the forecast period, reaching $114.87 billion by the year 2030, according to a Bloomberg report. In the commercial and residential sectors, liquid waste generation is expected to be driven by the increasing water usage in households worldwide. Additionally, strict regulations and ongoing investments in industries like oil & gas, petrochemical, and chemical sectors are expected to boost the demand for wastewater secondary treatment equipment, thereby driving the need for liquid waste management services.

In this article, we discuss the best waste management stocks to buy, which include Republic Services, Inc. (NYSE:RSG), Waste Management, Inc. (NYSE:WM), and Waste Connections, Inc. (NYSE:WCN).

Dmitry Kalinovsky/Shutterstock.com

Our Methodology

We chose the top waste management stocks based on overall hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the second quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm.

Best Waste Management Stocks to Buy Now

12. Perma-Fix Environmental Services, Inc. (NASDAQ:PESI)

Number of Hedge Fund Holders: 6

Perma-Fix Environmental Services, Inc. (NASDAQ:PESI) is an environmental and technology-focused firm in the United States. The company is divided into two segments – Treatment, which deals with processing and disposal of nuclear and hazardous waste, and Services, which offers a range of technical services, from radiological measurements to consulting and waste management. The company is also engaged in research and development for innovative waste processing techniques.

According to Insider Monkey’s second quarter database, 6 hedge funds were bullish on Perma-Fix Environmental Services, Inc. (NASDAQ:PESI), compared to 5 funds in the previous quarter. Paul Solit and Eric Singer’s Potomac Capital Management is the largest position holder in the company, with 301,000 shares worth $3.3 million.

In addition to Republic Services, Inc. (NYSE:RSG), Waste Management, Inc. (NYSE:WM), and Waste Connections, Inc. (NYSE:WCN), Perma-Fix Environmental Services, Inc. (NASDAQ:PESI) is one of the best waste management stocks to buy.

Long Cast Advisers made the following comment about Perma-Fix Environmental Services, Inc. (NASDAQ:PESI) in its Q2 2023 investor letter:

“Perma-Fix Environmental Services, Inc. (NASDAQ:PESI). Signs continue to point to a likely 2024/2025 start date for processing waste at Hanford. That alone will contribute +$2 / share in earnings. Seems worth the wait.”

11. Quest Resource Holding Corporation (NASDAQ:QRHC)

Number of Hedge Fund Holders: 7

Quest Resource Holding Corporation (NASDAQ:QRHC) offers waste management solutions in the United States. It is one of the top waste management stocks to buy. The company’s services cover the repurposing, recycling, and proper disposal of different types of waste and recyclable materials. The company also includes supplementary services and solutions aimed at diverting waste from landfills. On August 14, Quest Resource Holding Corporation (NASDAQ:QRHC) reported a Q2 non-GAAP EPS of -$0.04, outperforming Wall Street estimates by $0.02. However, its revenue came in at $74.5 million, falling short of estimates by $0.92 million.

According to Insider Monkey’s second quarter database, 7 hedge funds were bullish on Quest Resource Holding Corporation (NASDAQ:QRHC), same as the preceding quarter. Nelson Obus’ Wynnefield Capital held the largest position in the company, with 2.57 million shares worth $16.76 million.

Long Cast Advisers made the following comment about Quest Resource Holding Corporation (NASDAQ:QRHC) in its Q2 2023 investor letter:

“Quest Resource Holding Corporation (NASDAQ:QRHC). One of our longest-term holdings, it acts as a platform manager of independent waste services. The company swallowed a big acquisition and carries a hefty debt load as a result. This adds a tinge of worry. If they can pay down some debt or refinance at less onerous interest rates, something I think will be available to them possibly by year end, the benefits would fall to the bottom line. We’ve owned this as the company evolved from “crawling to a walking” and I expect soon it will be set up for the long haul to “run” with the opportunity to blossom into something bigger.”

10. Montrose Environmental Group, Inc. (NYSE:MEG)

Number of Hedge Fund Holders: 10

Montrose Environmental Group, Inc. (NYSE:MEG), one of the best waste management stocks, operates as a global environmental services company, offering services in three segments – Assessment, Permitting and Response; Measurement and Analysis; and Remediation and Reuse. On September 14, Montrose Environmental Group, Inc. (NYSE:MEG)’s director revealed the acquisition of 10,000 company shares, with a transaction value of $329,440.

According to Insider Monkey’s second quarter database, 10 hedge funds were bullish on Montrose Environmental Group, Inc. (NYSE:MEG), compared to the last quarter when 12 funds had invested in the stock. Richard Driehaus’ Driehaus Capital is the largest shareholder of the company, with 362,450 shares valued at approximately $15.27 million.

Conestoga Micro Cap Strategy made the following comment about Montrose Environmental Group, Inc. (NYSE:MEG) in its second quarter 2023 investor letter:

Montrose Environmental Group, Inc. (NYSE:MEG): MEG is a pure play environmental services company that offers end-to-end solutions for addressing environmental issues that are largely insulated from economic and political cycles. After reporting a challenging close to last year, the business jumped to a strong start in 2023 with better revenue and margins driving an upward revision to its full year guidance.

9. Li-Cycle Holdings Corp. (NYSE:LICY)

Number of Hedge Fund Holders: 10

Li-Cycle Holdings Corp. (NYSE:LICY) is a Canadian company involved in the recycling and resource recovery of lithium-ion batteries. Ranked 9th on our list of the best waste management stocks, Li-Cycle Holdings Corp. (NYSE:LICY) also provides a range of materials used in both cathodes and anodes of batteries. This includes essential elements like lithium, nickel, cobalt, graphite, copper, and aluminum.

According to Insider Monkey’s second quarter database, 10 hedge funds were bullish on Li-Cycle Holdings Corp. (NYSE:LICY), compared to 12 funds in the previous quarter. Zilvinas Mecelis’ Covalis Capital is the top shareholder of the company, with a position comprising 12.02 million shares valued at $66.72 million.

8. Enviri Corporation (NYSE:NVRI)

Number of Hedge Fund Holders: 17

Enviri Corporation (NYSE:NVRI), one of the best waste management stocks, offers environmental solutions for industrial and specialty waste streams in the United States and abroad. The company operates through two segments – Harsco Environmental and Harsco Clean Earth. The company formerly operated under the name Harsco Corporation and later rebranded to Enviri Corporation (NYSE:NVRI) in June, 2023. On November 2, Enviri Corporation (NYSE:NVRI) announced a Q3 non-GAAP EPS of $0.05 and a revenue of $524.59 million, outperforming Wall Street estimates by $0.09 and $14.91 million, respectively.

According to Insider Monkey’s second quarter database, 17 hedge funds were bullish on Enviri Corporation (NYSE:NVRI), up from 14 funds in the prior quarter. D. E. Shaw’s D E Shaw held the largest position in the company, with 2.18 million shares worth $21.54 million.

7. Clean Harbors, Inc. (NYSE:CLH)

Number of Hedge Fund Holders: 26

Next on our list of the best waste management stocks is Clean Harbors, Inc. (NYSE:CLH). It delivers environmental and industrial services in the United States and globally. The company divides its operations into two segments – The Environmental Services and The Safety-Kleen Sustainability Solutions. Under the Environmental Services segment, the company is involved in the collection, transportation, treatment, and disposal of both hazardous and non-hazardous waste. Meanwhile, within the Safety-Kleen Sustainability Solutions segment, they offer services for the pickup and transportation of containerized waste, whether it’s hazardous or non-hazardous in nature.

According to Insider Monkey’s second quarter database, 26 hedge funds were bullish on Clean Harbors, Inc. (NYSE:CLH), compared to 27 funds in the preceding quarter. Select Equity Group is the largest position holder in the company, with 2.05 million shares valued at $337.04 million.

SouthernSun Small Cap Strategy made the following comment about Clean Harbors, Inc. (NYSE:CLH) in its Q1 2023 investor letter:

“We exited our position in Clean Harbors, Inc. (NYSE:CLH) during the quarter. Clean Harbors is North America’s leading provider of environmental and industrial services including end-to-end hazardous waste management, emergency spill response, industrial cleaning and maintenance and recycling services. They are also America’s largest re-refiner and recycler of used motor oil.

We first purchased shares in Clean Harbors in 2013 and persevered through a sharp and protracted decline in oil prices beginning in 2014, in addition to an industrial recession in 2015/16 and again in 2020. The company has experienced significant tailwinds in 2021 and 2022, with strong industrial production and improved oil price dynamics, and we ultimately took the opportunity to sell our position in the quarter at near record high levels for the stock. Our mid-single digit returns over our holding period are below the bar for a SouthernSun business, even if the returns are not too different than the benchmarks over that timeframe. We continue to press ourselves to learn not only from our “winners” and “losers”, but also our mediocre performers. The unpacking of this investment over the coming quarters and years will no doubt produce fruit for future underwritings.

Founder and long-time CEO, Alan McKim, announced his retirement late last year, and while we believe the team he leaves behind is capable, we also believe this is a highly capital intensive business which requires high capacity utilization to maximize cash flow. In addition, this is a North America only company with no sights set on international expansion. Given substantial market share in their core business, we believe that further growth is limited in the absence of M&A that might need to be outside of that core – potentially increasing risk without sufficient reward, in our opinion.”

6. Stericycle, Inc. (NASDAQ:SRCL)

Number of Hedge Fund Holders: 27

Stericycle, Inc. (NASDAQ:SRCL) delivers solutions to ensure compliance with regulations worldwide. The company’s services include regulated waste management and compliance, addressing categories such as regulated medical waste, proper disposal of sharps waste, pharmaceutical waste management, controlled substance waste disposal, healthcare hazardous waste, and the safe handling and disposal of COVID-19 waste.

According to Insider Monkey’s second quarter database, 27 hedge funds were bullish on Stericycle, Inc. (NASDAQ:SRCL). 28 funds had invested in the stock during the preceding quarter. John W. Rogers’ Ariel Investments is the top shareholder of the company, with approximately 4.1 million shares worth $190.15 million.

Like Republic Services, Inc. (NYSE:RSG), Waste Management, Inc. (NYSE:WM), and Waste Connections, Inc. (NYSE:WCN), Stericycle, Inc. (NASDAQ:SRCL) is one of the best waste management stocks to buy.

Heartland Mid Cap Value Fund made the following comment about Stericycle, Inc. (NASDAQ:SRCL) in its second quarter 2023 investor letter:

“Industrials. Stericycle, Inc. (NASDAQ:SRCL) is the largest medical waste disposal and compliance company in the U.S. Over the past few years, the company has transformed itself from an aggressive, acquisition-driven company to one focused on organic growth, integrating core assets, reducing debt, and expanding profit margins. Toward that end, the company has undertaken several self-help strategies. This includes divesting non-core operations in order to focus on its core businesses of medical waste disposal and document destruction in the U.S. and Europe. Today, SRCL is largely complete with this portfolio reshaping and has successfully reduced debt to target levels. The critical action items left for the company pertain to integrating technology systems and demonstrating further progress in operational execution. In summary, SRCL is morphing from a ”holding company” into an “operating company”, with the latter offering far better prospects of rewarding shareholders.

Candidly, this is not our first time owning SRCL. The first time around, we became shareholders far too early in the company’s turnaround efforts and exited the position. However, we continue to monitor the progress made under a much-improved management team and expect a better outcome for shareholders going forward. Regulated waste companies with leading market shares and secular growth, like SRCL, trade at far more expensive multiples of EBITDA and free cash flow. Additionally, the company is significantly underearning its potential. As this dynamic changes, we can envision a virtuous circle where the company earns progressively higher trading multiples on higher earnings power.”

Click to continue reading and see 5 Best Waste Management Stocks to Buy Now.