Cleaning worldwide
With base in the state of New York, Pall Corporation (NYSE:PLL) is a global producer and supplier of filtration, separation, and purification products for liquids and gas. The business focuses on two segments: health care and industrial. Recently, the firm made a deal with Semicon West to produce new technologies for filtering liquids.
In the short term, Pall Corporation (NYSE:PLL) is set to benefit from an increasing global demand for pure water. In the long term, government regulation will further drive growth in the industry. Also, the firm dug an economic moat by addressing specific demands by customers raising barriers against the competition. More, the company continuously strives to keep operating costs low, while improving production and searching new opportunities for growth.
During the last three years, Pall Corporation (NYSE:PLL) has bettered its finances. Revenues, net income, and cash saw progressive increments during that time. Also, free cash experienced important increments thanks to high replacement ratios. Finally, during the last decade operating margin never fell below 10%, and during the last 3-years stood above 15%.
Trading at 25.5 times its earnings, meaning a 40% premium to the industry average, yielding 1.36% and paying $0.25 dividends, and a price tag close to the 52-week high, the stock seems overvalued but tempting. I think it’s a BUY because Pall Corporation (NYSE:PLL) has secured a market share, continues to innovate, and a favorable environment will drive growth forward.
Federal clean up
A multinational provider of comprehensive environmental solutions for complex water contamination and other environmental problems, Tetra Tech, Inc. (NASDAQ:TTEK) serves public and private customers alike. More recently, the firm is reported to have landed its third contract with the EPA, said to be worth $50 million.
Now, Tetra Tech, Inc. (NASDAQ:TTEK) has benefited from an increasing global demand for water, environmental, and infrastructure solutions. Additionally, new government contracts are expected to offset last year’s decline. Further ahead, new government regulation, new long-term contracts with US authorities, and strategic acquisitions will drive the firm’s growth. Nonetheless, there are concerns about future performance due to the current slow economic recovery in the US.
Financial strength for Tetra Tech, Inc. (NASDAQ:TTEK) is moderate. Although revenues, net income, and free cash have improved during the last three years, debt reached previously unseen levels. On the other hand after taking a heavy blow in 2011, cash flow began to pick up again. Finally, operating margin has declined during the last decade, and today stands at 4%.
Currently trading at 14.6 times its earnings, packing a 54% discount to the industry average, and a price tag close to its 52-week low, the stock appears undervalued. It is recommended to HOLD until Tetra Tech, Inc. (NASDAQ:TTEK) reduces its debt level and growth perspectives are well founded.
Cleaning with carbon
Born as a steel company, today Calgon Carbon Corporation (NYSE:CCC) is a company dedicated to the production of carbon-based filtering devices for liquids and gas. Operations are divided among four segments: activated carbon, service, engineered solutions, and consumer health. Most recently, analysts have taken different perspectives over the last report.
Now, Calgon Carbon Corporation (NYSE:CCC) is placing attention on unfavorable foreign currency exchange, cost cutting polices, and soon to expire supply contracts for bituminous. Later, the firm will solidify Asian operations, focus on mercury removal, increase heavy water treatment, and improve facility processing. Future plans, and shareholder’s rewards, are said to be finance with increasing revenues from recent price hikes.
Financially, Calgon Carbon Corporation (NYSE:CCC) is improving since 2010. Free cash returned to positive levels in 2012 after two years in red. Revenues, however, have steadily increased during the last four years. But, debt has risen to a worrying level last year, putting a big dent on the financial record. Finally, operating margin took on a downtrend during the last 3-years, and stands today at 7%.
Trading at 39.4 times its earnings, carrying an 18% discount to the industry average, paying $0.03 dividends, and a price tag close to the 52-week high, the stock seems undervalued. It is recommended to HOLD because Calgon Carbon Corporation (NYSE:CCC) is financially weak at this time, associating great risks to any potential long-term investment.
Filtering thoughts
I recommend buying stock from Pall Corporation (NYSE:PLL) because the company settled its business structure before market preferences changed. Also, the firm has diversified its physical presence, and progressively improved its finances. Last, competition will put up a fight but no challenger poses a real threat.
The article Environmental Clean Stocks: Pollution Control originally appeared on Fool.com and is written by patricio kehoe.
patricio kehoe has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. patricio is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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