We recently compiled a list of the 10 Best Waste Management Stocks to Buy According to Analysts. In this article, we are going to take a look at where Perma-Fix Environmental Services, Inc. (NASDAQ:PESI) stands against the other waste management stocks.
The waste management industry is experiencing robust growth as industrialization and urbanization gather steam. Positive trends in government regulations and the use of advanced technologies in waste management are also fueling growth. According to Grand View Research the industry was valued at $1.29 trillion in 2022 and is projected to grow at a compound annual growth rate of 5.4% from 2023 to 2030.
The growth is expected to gather pace due to stringent government regulations pertaining to resource conservation and waste shipment regulation to improve service delivery. Escalating waste volumes from medical facilities industries to residential settings due to urbanization are also expected to impact the sector positively. The sector is also supported by factors such as the growth of smart cities and the rising use of integrated waste management systems.
READ ALSO: 10 Best Recycling Stocks to Buy According to Hedge Funds and 11 Best NYSE Penny Stocks to Buy Right Now.
The surge in hazardous waste is one of the factors strengthening the prospects of waste management companies. America has consistently topped the charts as the most wasteful country in the world, with over 239 million metric tons of garbage every year. While most people might perceive it as a threat to the environment and society, it presents a massive opportunity for waste management companies.
“It’s a profitable industry,” according to Debra Reinhart, a Board of Scientific Counselors member for the EPA. “It’s a difficult industry, but it is profitable if it’s done right.”
Consequently, advanced waste disposal methods and techniques have emerged as a result of growing awareness about proper waste disposal to preserve the health of humans and animals. Waste management companies must dispose of or recycle waste on time due to the presence of large quantities of hazardous compounds, including metals and salts.
The growing demand for efficient solid waste management frameworks and strategies that prioritize public security and economic development is a welcome for waste management companies. For starters, it’s made it possible for companies to hike prices for their services, citing their efficient solid waste management systems. The price increases have resulted in robust revenue growth and improved profit margins, allowing waste management companies to generate more shareholder value.
As long as there are people and companies who see trash as a resource rather than waste, the solid waste management sector will only keep growing. As governments worldwide agitate for a safe environment free of hazardous or other waste materials, companies engaged in waste management will always record booming business.
Similarly, as the US economy steers from recession following the Federal Reserve cutting interest rates for the second time, booming industrial activity is expected, resulting in more waste generated by factories. Likewise, consumer purchasing power has also been boosted, given the low interest rates in play, which should result in more waste volume due to increased spending on various items.
Consequently, waste management companies are on the cusp of booming business due to higher waste volumes. With most hiking prices amid limited opposition, now would be the best time to closely watch the best waste management stocks to buy as they are well poised to generate long-term value.
Our Methodology
To compile the list of the best waste management stocks to buy according to analysts, we scanned the stock market for companies engaged in all kinds of waste management. We then settled on waste management stocks that Wall Street analysts believe are well poised to explode backed by solid underlying fundamentals. Upon analyzing hedge fund sentiment and holdings, we ranked the stocks in ascending order based on their upside potential, as of November 22.
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).
Manned and unmanned hazardous waste-processing equipment operating in a hazardous environment.
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.”
Overall PESI ranks 5th on our list of the best waste management stocks to buy according to analysts. While we acknowledge the potential of PESI 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 PESI 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.
