Smart Money is Betting on These Environmental Services Stocks

The environment has been an important global issue for years now. Earlier this month, President Obama signed the Paris climate deal and the U.S. government currently spends billions of dollars every year on energy and environment. The allocation for 2016 amounted to $51 billion and increased focus on environment can easily result in more business for environmental services companies.

Having said that, let’s take a look look at some environmental services stocks that smart money is betting on this quarter. The five stocks which we are going to analyze today are Waste Management, Inc. (NYSE:WM), Waste Connections, Inc. (NYSE:WCN), Republic Services, Inc. (NYSE:RSG), Stericycle Inc (NASDAQ:SRCL), and Clean Harbors Inc (NYSE:CLH).

An everyday investor doesn’t have the same resources and capabilities to analyze different publicly-traded companies as hedge funds do. This is why it is a good idea to see what stocks hedge funds like the most and try to imitate some of their bullish moves in an attempt to reap market-beating returns. At Insider Monkey, we follow the activity of several hundred of the best-performing hedge funds as part of our strategy. We analyze their 13F filings and use the data to see what stocks they are collectively bullish on. Through extensive research we have determined that the best approach to outperform the broader indices is to follow hedge funds into their top small-cap ideas. In our backtests, a portfolio of the 15 most popular small-cap stocks generated monthly alpha of 81 basis points, versus 0.7 percentage points posted by hedge funds’ top large- and mega-cap picks (see more details here).

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Waste Management, Inc. (NYSE:WM)

– Number of Hedge Fund Shareholders (as of June 30): 34

– Total Value of Hedge Funds’ Holdings (as of June 30): $1.92 Billion

Let’s start with Waste Management, Inc. (NYSE:WM), the most popular environmental services stock. A total of 34 funds from our database are holding long positions worth around $1.92 billion as of the end of June. The stock has gained around 19% since the beginning of January. For the second quarter, American States Water reported revenue of $111.95 million, missing the estimates of $113.01 million, but EPS of $0.45 was higher than the expected $0.44. Waste Management, Inc. (NYSE:WM) reported revenue of $3.43 billion for the second quarter topping estimates by $30 million, while EPS of $0.74 per share was higher than expectations of $0.71.

Waste Connections, Inc. (NYSE:WCN)

– Number of Hedge Fund Shareholders (as of June 30): 28

– Total Value of Hedge Funds’ Holdings (as of June 30): $964.70 Million

The second most popular stock among hedge funds tracked by us in environmental services space was Waste Connections, Inc. (NYSE:WCN). Out of the total funds we track, 28 hedge funds are long in the stock with an investment of $964.70 million at the end of second quarter. Waste Connections, Inc. (NYSE:WCN) has been one of the star performers with returns of over 45% on a year-to-date basis in comparison to S&P 500’s return of 6%. The company reported second-quarter revenue of $727.6 million which beat estimates of $712.34 million, while net income of $0.66 per share was $0.14 higher than expected.

On the next page, we are going to discuss Republic Services, Inc. (NYSE:RSG), Stericycle Inc (NASDAQ:SRCL), and Clean Harbors Inc (NYSE:CLH).

Republic Services, Inc. (NYSE:RSG)

– Number of Hedge Fund Shareholders (as of June 30): 25

– Total Value of Hedge Funds’ Holdings (as of June 30): $557.97 Million

Republic Services, Inc. (NYSE:RSG) ranked on the third spot as 25 investors from our database amassed $557.97 million worth of stock at the end of June. Shares of the company are up by 15% since the beginning of the year. For the second quarter, Republic Services, Inc. (NYSE:RSG)’s reported revenue of $2.35 billion, which fell short of estimates by $20 million, while net income of $0.55 per share was in line with analyst expectations.

Stericycle Inc (NASDAQ:SRCL)

– Number of Hedge Fund Shareholders (as of June 30): 22

– Total Value of Hedge Funds’ Holdings (as of June 30): $593.21 Million

A total of 22 funds from our database held $593.21 million worth of Stericycle Inc (NASDAQ:SRCL) shares at the end of June, compared to $518.73 million a quarter earlier. The company’s second-quarter revenue of $891.6 million missed analysts’ estimates by $21.19 million, while net income of $1.18 per share was in line with the consensus estimate. The company also stated that there are accounting errors in previous financial statements, but added that they should not be relied upon. Shares of Stericycle Inc (NASDAQ:SRCL) are down by 34% since the beginning of year.

Clean Harbors Inc (NYSE:CLH)

– Number of Hedge Fund Shareholders (as of June 30): 16

– Total Value of Hedge Funds’ Holdings (as of June 30): $163.12 Million

The fifth environmental stocks which hedge funds like is Clean Harbors Inc (NYSE:CLH). Overall, 16 funds tracked by us held long positions in the stock with a total value of $163.12 million at the end of the second quarter. The shares of the company are up by 12% since the beginning of the year. The second quarter was not good for Clean Harbors Inc (NYSE:CLH) as the company reported revenue of $697.51 million, which was below estimates by $29.72 million, while EPS of $0.15 missed estimates by $0.08. Clean Harbors Inc (NYSE:CLH) also revised its full-year revenue guidance downwards to between $430 million and $450 million from earlier estimates of $430 million to $490 million.

Disclosure: None