We recently compiled a list of the 10 Best Recycling Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Casella Waste Systems, Inc. (NASDAQ:CWST) stands against the other recycling stocks.
Imagine living in a society where all kinds of waste are converted into useful resources that power sectors like construction, energy packaging, and automotive while reducing landfill clutter. That’s the reality as calls for sustainability fuel recycling in the race to protect the environment and resources.
Consequently, the waste recycling services market is experiencing robust growth amid increased awareness of environmental sustainability, stringent waste disposal regulations and increased focus on resource conservation. With the recycling services market projected to be worth $78.43 billion by 2028 (as per The Business Research Company), there are tremendous opportunities to unlock by focusing on companies that are involved in the space.
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One of the key areas with tremendous potential in the recycling business involves plastic purification so that it can go back into the circular economy. Katherine Ogundiya, an analyst at Barclays, believes the crop of companies working on plastic recycling has been overlooked, yet they possess tremendous upside potential. “Advanced recycling has immense potential to transform the plastic waste crisis,” she said in a research note to investors.
The metal recycling market is growing significantly, primarily driven by the increasing demand for consumer electronics. Electronic waste is produced in tandem with the growth in the production and use of gadgets like smartphones, laptops, tablets, and home appliances. Essential metals that can be recovered and recycled, such as copper, aluminum, gold, and silver, are present in these devices. To preserve natural resources and lessen the environmental impact of mining and processing new metals, it is essential to recycle metals from e-waste.
The Environmental Protection Agency announced $2.6 billion in newly available funding for drinking water infrastructure through the Bipartisan Infrastructure Law to accompany that rule.
Based on data gathered in 2021, the Environmental Protection Agency projected in a report to Congress last year that the United States will require $625 billion in investments over two decades in drinking water infrastructure. The investment should also benefit companies engaged in the water recycling business by 2030.
The recycling sector is a prime example of how profit and the environment can coexist at a time when sustainability is a major topic of discussion worldwide. In addition to promoting a greener future as we move toward a more circular economy recycling companies offer access to a thriving market with substantial growth potential.
We’ll introduce you to some of the most notable waste management and recycling companies in this article. These businesses spearhead change and present astute investors with exciting prospects of long-term shareholder value.
Our Methodology
To compile the list of the best recycling stocks to buy according to hedge funds, we used a stock screener to find waste management and recycling companies. We then selected the stocks that were the most popular among elite hedge funds, as of Q2 2024. Finally, we ranked the stocks in ascending order based on the number of hedge funds that held stakes in them.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Aerial shot of a recycling plant and its surrounding environment, highlighting the company’s commitment to environmental sustainability.
Casella Waste Systems, Inc. (NASDAQ:CWST)
Market cap as of November 7: $6.70 Billion
Number of Hedge Fund Holders: 16
Casella Waste Systems, Inc. (NASDAQ:CWST) is a waste management company with a robust recycling, collection, organics, and disposal facility infrastructure. It offers resource management services primarily in solid waste collection and disposal. While the stock is up by more than 17% for the year, the upward momentum comes against solid financial results affirming the company’s growth metrics.
Strategic investments in frontline operations have been the catalyst behind Casella Waste Systems, Inc. (NASDAQ:CWST), achieving over $400 million in revenue in the third quarter and over $10 million in adjusted earnings for the first time. As reported on October 30, 2024, revenue in the quarter was up 16.7% year over year to $411.6 million, with adjusted EBITDA increasing 14.9% to $102.9 million, reflecting strong operational performance.
Given that Casella Waste Systems, Inc. (NASDAQ:CWST) sales have grown at a 15.5% compound annual growth rate over the last five years, it underscores the resilience of its core business, consequently affirming long-term prospects. Annualized revenue growth of 18.8% over the past two years is above its five-year trend, affirming strong demand for its waste management solutions.
Here is what Alger Weatherbie Specialized Growth Fund said about Casella Waste Systems, Inc. (NASDAQ:CWST) in its first quarter 2024 investor letter:
“Casella Waste Systems, Inc. (NASDAQ:CWST) is a regional, integrated solid waste management services company that provides collection, transfer, landfill disposal, and recycling services primarily in secondary markets throughout the northeastern U.S. During the quarter, shares contributed to performance after the company reported strong fiscal fourth quarter results, as revenues grew 32% year-over-year. Solid waste revenues during the quarter were also strong, as steady price increases offset a slight decline in volumes. Further, management provided forward guidance that met analyst estimates, as management believes margins should continue to improve going forward. We believe Casella is well positioned for long-term growth, driven by strong pricing power, an attractive landfill footprint across the northeast U.S., and further expansion into the mid-Atlantic region.”
Overall CWST ranks 8th on our list of the best recycling stocks to buy according to hedge funds. While we acknowledge the potential of CWST as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CWST but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.