In this article, we shall discuss the 5 best recycling stocks to buy now. To read our detailed analysis of the global waste recycling services industry in 2023, go directly and see 12 Best Recycling Stocks To Buy Now.
5. Commercial Metals Company (NYSE:CMC)
Hedge Fund Holdings: 30
Based in Irving, Texas, Commercial Metals Company (NYSE:CMC) is an American producer of rebar and other related products, primarily geared towards the construction industry. The company also focuses on the purchase and recycling of scrap metal- mostly steel. Commercial Metals Company (NYSE:CMC) has largely managed to maintain investor interest around its stock, with 30 funds long the stock in both Q2 and Q3 of 2023. On November 18, BofA Securities lowered the price target on Commercial Metals Company (NYSE:CMC) to $55 from $60, and maintained a Buy rating on the shares. According to the analyst, although falling prices and skyrocketing inflation pose near-term challenges for the company, infrastructure projects are expected to pick up pace in 2023 and should drive more than 15% incremental demand for long steel over the next couple of years. Hence, despite average price risk, the stock makes for an attractive investment opportunity in the near-term. Furthermore, sales and earnings for the stock have been drastically improving, with recent bolt-on acquisitions adding to its capabilities and potential.
4. LKQ Corporation (NASDAQ:LKQ)
Hedge Fund Holdings: 33
Based in Chicago, Illinois, LKQ Corp. (NASDAQ:LKQ) is an American company which focuses on the production and recycling of alternative and specialty parts to repair and accessorize automobiles and other vehicles. In Q3 2023, hedge fund sentiment around LKQ Corp. (NASDAQ:LKQ) peaked with more than 33 funds long the stock, up from 32 in the preceding quarter. It is a dividend paying stock with a forward yield of 2.62% as of Q3 2023, making it an ideal pick for long-term investors looking for a stable income. The company’s financial performance in Q3 2023 was characterized by a 15% increase in sales, largely catalyzed by organic growth and inorganic drivers. The recent dip in stock price was largely owing to a revision of the company’s guidance for fiscal 2023. However, despite the challenge, there is broad consensus around the fact that the company’s fundamentals remain sound, characterized mostly by robust growth in North American regions and service sectors and enormous potential in the EU aftermarket parts market.
3. Republic Services Inc. (NYSE:RSG)
Hedge Fund Holdings: 37
Based in Phoenix, Arizona, Republic Services Inc. (NYSE:RSG) is an American waste disposal company which focuses on non-hazardous solid waste collection, transfer, disposal, recycling, and energy services. Republic Services Inc. (NYSE:RSG) delivered a strong financial performance in Q3 2023, beating EPS estimates of $1.42 by $0.12. The company ended up generating $1.52 in earnings per share. On October 23, UBS analyst Jon Windham upgraded the rating on Republic Services Inc. (NYSE:RSG) from Neutral to Buy, and raised the price target from $155 to $170. According to the analyst, the company is an attractive dividend growth stock with consistent outperformance and low volatility when pit against the S&P 500. Despite a premium valuation, the company has boasted robust fundamentals, a strong financial ecosystem, a trajectory of dividend hikes, and a recent buyback program, making it an ideal pick for long-term investors. As of Q3 2023, Republic Services Inc. (NYSE:RSG) has a forward dividend of 2.14 and a dividend yield of 1.33%. Based on its history of strong resilience, high barriers to entry, and attractive valuations, the company is one of the best recycling stocks to buy now.
2. Waste Connections Inc. (NYSE:WCN)
Hedge Fund Holdings: 38
Based in The Woodlands, Texas, Waste Connections Inc. (NYSE:WCN) is an American integrated waste services company which focuses on waste collection, transfer, disposal and recycling services, primarily of solid waste. On November 27, Wells Fargo analyst John Mazzoni initiated coverage on Waste Connections Inc. (NYSE:WCN) with an Overweight rating and a $160 price target. According to Mazzoni, landfill issues in California and Texas are temporary and investors need to ignore the momentary dip in additional operating expenses in Q4 2023. Despite the landfill challenges, the company achieved robust core price growth and a sound financial result in Q3 2023. The company posted an EPS of $1.17, beating estimates of $1.14 by $0.03. This, coupled with the low valuation on Waste Connections Inc. (NYSE:WCN) make for an excellent entry-point.
1. Waste Management Inc. (NYSE:WM)
Hedge Fund Holdings: 41
Headquartered in Houston, Texas, Waste Management Inc. (NYSE:WM) is a North American waste management, comprehensive waste, environmental services, and recycling services company. Investor interest around Waste Management Inc. (NYSE:WM) skyrocketed in Q3 2023, with 41 funds long the stock. This was up from 39 funds in the preceding quarter. The company posted an EPS of $1.63 in Q3 2023, beating estimates of $1.61 by $0.02. On October 26, Stifel analyst Michael Hoffman raised the price target on Waste Management Inc. (NYSE:WM) from $177 to $183, and maintained a Buy rating on the shares. According to the analyst, the stock’s Q3 2023 financial performance was stellar, with revenue rising by more than 2.4%, Furthermore the company’s pricing power and mechanisms aimed at reducing expenditure have built up resiliency to macroeconomic headwinds in recycling and renewable energy. The company projects that its sustainable investments sector will be able to rake in $740 million of incremental EBITDA by 2026, contributing to long-term growth.
Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also take a peek at 30 Best Gifts Under $50 for Her and AARP’s Most Affordable Places to Retire in Recent Years.
