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HCCI vs. CWST: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Pollution Control sector might want to consider either Heritage-Crystal Clean or Casella (CWST - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, both Heritage-Crystal Clean and Casella are sporting a Zacks Rank of # 1 (Strong Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

HCCI currently has a forward P/E ratio of 13.49, while CWST has a forward P/E of 97.77. We also note that HCCI has a PEG ratio of 0.90. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CWST currently has a PEG ratio of 6.90.

Another notable valuation metric for HCCI is its P/B ratio of 2.51. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, CWST has a P/B of 10.79.

These metrics, and several others, help HCCI earn a Value grade of B, while CWST has been given a Value grade of F.

Both HCCI and CWST are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HCCI is the superior value option right now.


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