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On Jul 18, we upgraded our recommendation on pollution control company Calgon Carbon Corporation (CCC - Analyst Report) to Outperform factoring in the benefits from its cost-cutting actions and price increases.
 
Why Upgraded?
 
Calgon Carbon’s earnings for first-quarter 2013, reported on May 6, topped the Zacks Consensus Estimate but sales missed. This Zacks Rank #1 (Strong Buy) stock is expected to gain from its cost reduction and pricing actions.
 
Following the release of the first quarter results, the Zacks Consensus Estimate for 2013 for Calgon Carbon went up 3.7% to 84 cents per share.
 
Calgon Carbon, which competes with MeadWestvaco Corporation (MWV - Analyst Report) among others, remains confident in its ability to balance the need for future investment with its responsibility to provide short-term returns. The company continues to see ballast water treatment, reactivation services and mercury removal as its basis for sustainable growth. It remains actively focused on improving margins across all regions.
 
Calgon Carbon’s strategic initiatives position it for significant growth in the longer term. Its reactivation facilities have remarkably supported its growth and have established its presence in several markets. The global demand for reactivation services is expected to climb as regulations for water quality strengthen around the world.
 
Calgon Carbon has also reduced its exposure to rising coal costs by identifying new sources of supply and a variety of coals that are effective in the manufacture of its high quality products. It has also embarked on aggressive cost reduction initiatives to boost margins. Calgon Carbon’s cost improvement program, which includes consolidation of operations and headcount reductions, is expected to contribute toward margin expansion.
 
Calgon Carbon’s price increase actions should also drive sales and profitability. It has implemented price hikes on activated carbon and service products which are expected have an impact of more than $10 million in 2013.
 
Other Stocks to Consider
 
Other companies in the pollution control industry worth considering are CECO Environmental Corp. (CECE - Snapshot Report) and Pure Cycle Corporation . While CECO retains a Zacks Rank #1 (Strong Buy), Pure Cycle holds a Zacks Rank #2 (Buy).

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