Using it Again
When you think about recycling the image of a soda can or a bottle being used to make some other product is probably what comes to mind. That’s a big part of the business, but it isn’t the only way to benefit from the things that others throw away.
The old saying that one man’s trash is another man’s treasure is an understatement when it comes to some innovative companies. Here are three to keep an eye on:
From The Scrap Heap
Technically, LKQ Corporation (NASDAQ:LKQ) is in the aftermarket auto parts business. However, it takes a different approach than most. A big portion of its business comes from recycled auto parts. This basically means it buys cars that no one wants, usually because they have been damaged in an accident, and pulls out the parts that are still useable.
In 2012, the company bought over 650,000 vehicles for this purpose. That makes the company a notable recycler. However, scrap yards, which is basically what the company operates, aren’t new. What is new and exciting about LKQ Corporation (NASDAQ:LKQ) is its business model. It has been consolidating a fragmented industry.
For example, in 2012, the company bought 30 companies in North America. That brings the total since the company’s formation in 1998 to over 150. Today the company has hundreds of locations around the country and in Europe. Since most of its competitors are “independently owned distributors with one to three distribution centers,” it has a notable size advantage.
LKQ Corporation (NASDAQ:LKQ)’s top and bottom lines have been growing steadily for a decade. It’s a unique take on recycling, but one that looks like it has plenty of growth ahead.
Tasty Industrial Residue
Newalta Corporation (TSE:NAL) is based in Canada. It describes itself in this way: “Newalta Corporation (TSE:NAL) provides cost-effective solutions to industrial customers to improve their environmental performance with a focus on recycling and recovery of products from industrial residues.” That last bit is what makes the company unique.
Essentially, the company treats the waste from processes like oil drilling. However, it isn’t just making the waste safe again, it is pulling out valuable resources that can be sold. In the case of oil drilling waste, the company uses massive centrifuges to pull out the oil trapped in the residue. That oil can then be sold; not a bad trick.
The company has more than 250 facilities throughout Canada and in The United States, not including on-site facilities at customer locations. A leader in taking industrial waste and treating it, the company’s top line dipped during the 2007 to 2009 recession. That’s not surprising. The previous steady top line advance has since resumed.
The ability to pull out valuable commodities from waste positions the company for growth as its customers try to do more with less. This is particularly true as oil and natural gas drilling increases in North America. However, the company deals with many other products, too, like lead batteries. If you are looking for a recycler with a solid niche, Newalta Corporation (TSE:NAL) is a good pick.
Old Dog, New Tricks
Waste Management, Inc. (NYSE:WM)’s trash hauling trucks can be seen throughout The United States. At one point in its history, the company focused on collecting garbage and dumping it into landfills. That, however, has changed.
Today, the company is repositioning around recycling. Yes, that means taking cans and bottles from outside of peoples’ homes. However, it is doing more than just that. For example, many cities now allow residents to throw all of their recyclables into one big bin instead of having to separate them out into individual piles. That’s possible because companies like Waste Management, Inc. (NYSE:WM) have invested in the facilities to handle co-mingled recyclables.
That isn’t the only place where the company is innovating. The company has more than 130 landfill to gas operations. While there is always going to be trash that gets dumped in a landfill, Waste Management, Inc. (NYSE:WM) is turning that pile of rubbish into an energy source. In fact, a plant in California that converts landfill gas to liquefied natural gas powers 300 of its trucks.
This is the most direct play on “typical” recycling, but management is working hard to take the company to the next level. Income investors might find the company’s near 4% dividend yield attractive, too.
Working Smarter
These three innovative companies are working smarter to get more out of recycling. The are hidden leaders in a world that is moving more and more toward environmental stewardship. That sets them up for long-term growth.
The article 3 Companies Turning Scraps Into Wealth originally appeared on Fool.com and is written by Reuben Brewer.
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