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Pollution Control Stocks' Near-Term Outlook Appears Bright
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The Zacks Pollution Control industry comprises companies that provide innovative filtration systems, replacement parts, solutions for managing medical wastes, energy recovery devices and other products. Such products are primarily used in commercial, automotive repair, industrial, home healthcare, retail, pharmaceutical and hospitality end markets.
A few industry players offer solutions to deal with industrial waste and commercial chemical products as well as technologies to tackle air pollution. Also, one of the companies delivers services related to infrastructure, water, resource management, energy, etc. to government and commercial clients. Some notable firms in the industry are Donaldson Company, Inc. (DCI - Free Report) , Energy Recovery, Inc. (ERII - Free Report) and Fuel Tech, Inc. (FTEK - Free Report) .
Here are the industry’s three major themes:
Growing adoption of air pollution control equipment across manufacturing plants to meet regulatory compliances has been supporting this industry. For instance, the industry participants continue to market their technologies in several European countries, on account of the European Union's Industrial Emissions Directive in BAT Reference Documents (“BREFs”). Also, rising population levels, growing pollution-related health concerns and high infrastructure-related work in the United States are spurring demand for pollution abatement technologies and services. Additionally, rapid industrialization in several developing and developed countries has been boosting the global pollution control industry.
With oil prices recovering and economic activities gradually increasing on easing coronavirus-induced lockdown measures across countries, shale drillers are expected to consider adding rigs. This signifies the possibility of more oil production, thereby increasing the demand for pollution control equipment. In addition, the need for engineering and assessment services in disaster-related work has been building a strong demand environment for the industry participants.
Increasing popularity of alternative fuels for power generation in order to reduce dependency on coal, particularly in the United States and across developed countries, is limiting demand for industrial emission-abatement products. In addition, based on the guidelines of the pollution control boards in several countries, the pollution control equipment manufacturers need to invest frequently in the upgrade of products and services. Such frequent investments often hurt profitability and margins of the industry participants. In addition, shortage of skilled workers due to tight labor market conditions in the United States remains a concern.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Pollution Control industry is a 10-stock group within the broader Zacks Industrial Products sector. The industry currently carries a Zacks Industry Rank #89, which places it at the top 35% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bullish near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks from the industry, which look promising, it is worth taking a look at the industry’s performance and valuation picture.
Industry Underperforms S&P 500 & Sector
The Zacks Pollution Control industry has underperformed both its sector and the S&P 500 in the past year. While stocks in this industry have collectively declined 9.9%, the S&P 500 has moved up 5.4%. The Zacks Industrial Products sector has declined 4.7%.
One-Year Price Performance
Pollution Control Industry’s Valuation
Price/Earnings (P/E) ratio is commonly used for valuing pollution control stocks.
The industry currently has a forward 12-month P/E of 22.54X compared with the S&P 500’s 22.46X. It is trading above the sector’s forward 12-month P/E of 20.97X.
Over the past five years, the industry has traded as high as 26.96X and as low as 14.23X, with the median of 18.38X, as the chart below shows.
Pollution Control Industry’s Valuation Versus S&P 500
Pollution Control Industry’s Valuation Versus Sector
Bottom Line
Increased public and commercial demand for pollution-control equipment products and services will likely continue to drive performances of the industry players. We believe that investing in the industry may prove rewarding at the moment.
We present four promising pollution control stocks, which seem to be well-positioned to capitalize on the opportunities.
A brief discussion on the chosen stocks is provided below:
CECO Environmental Corp. : The stock of this Dallas, TX-based company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Despite the company’s share price declining 31.1% over the past year, it has increased 35.7% in the past three months.
The company has an earnings surprise of 23.57%, on average, for the trailing four quarters, surpassing and missing estimates twice each. In the past 30 days, the Zacks Consensus Estimate for the company’s earnings has remained stable at 48 cents for 2020. The consensus estimate for 2021 earnings has remained unchanged at 61 cents over the same time frame.
Price and Consensus: CECE
Casella Waste Systems, Inc. (CWST - Free Report) : The stock of this Rutland, VT-based company currently carries a Zacks Rank #3 (Hold). Over the past year, the company has gained 26.9%.
Notably, the company surpassed earnings estimates thrice, while meeting once in the trailing four quarters. It boasts an earnings surprise of 72.58%, on average, for the past four quarters. In the past 30 days, the Zacks Consensus Estimate for the company’s earnings has been unchanged at 54 cents for 2020. Also, the consensus estimate for the company’s 2021 earnings has remained stable at 81 cents.
Price and Consensus: CWST
Sharps Compliance Corp. : The stock of this Houston, TX-based company currently carries a Zacks Rank #3. The company has rallied 67.1% over the past year.
The company has an earnings surprise of 62.50%, on average, for the trailing four quarters, surpassing thrice, while missing in one. In the past 30 days, the Zacks Consensus Estimate for the company’s earnings has remained stable at a penny for fiscal 2020 (ended June 2020, results are awaited). Notably, the consensus estimate for fiscal 2021 (ending June 2021) earnings has remained stable at 13 cents.
Price and Consensus: SMED
Tetra Tech, Inc. (TTEK - Free Report) : The stock of this Pasadena, CA-based company currently carries a Zacks Rank #3. Although its share price has declined 7.2% over the past year, it has gained 3.2% in the past three months.
Notably, the company surpassed earnings estimates in the trailing four quarters. It boasts an earnings surprise of 6.32%, on average, for the past four quarters. In the past 30 days, the Zacks Consensus Estimate for the company’s bottom line has improved 3% to $3.12 for fiscal 2020 (ending September 2020). The consensus estimate for fiscal 2021 (ending September 2021) earnings has remained stable at $3.23.
Price and Consensus: TTEK
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Pollution Control Stocks' Near-Term Outlook Appears Bright
The Zacks Pollution Control industry comprises companies that provide innovative filtration systems, replacement parts, solutions for managing medical wastes, energy recovery devices and other products. Such products are primarily used in commercial, automotive repair, industrial, home healthcare, retail, pharmaceutical and hospitality end markets.
A few industry players offer solutions to deal with industrial waste and commercial chemical products as well as technologies to tackle air pollution. Also, one of the companies delivers services related to infrastructure, water, resource management, energy, etc. to government and commercial clients. Some notable firms in the industry are Donaldson Company, Inc. (DCI - Free Report) , Energy Recovery, Inc. (ERII - Free Report) and Fuel Tech, Inc. (FTEK - Free Report) .
Here are the industry’s three major themes:
Zacks Industry Rank Indicates Bright Prospects
The Zacks Pollution Control industry is a 10-stock group within the broader Zacks Industrial Products sector. The industry currently carries a Zacks Industry Rank #89, which places it at the top 35% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bullish near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks from the industry, which look promising, it is worth taking a look at the industry’s performance and valuation picture.
Industry Underperforms S&P 500 & Sector
The Zacks Pollution Control industry has underperformed both its sector and the S&P 500 in the past year. While stocks in this industry have collectively declined 9.9%, the S&P 500 has moved up 5.4%. The Zacks Industrial Products sector has declined 4.7%.
One-Year Price Performance
Pollution Control Industry’s Valuation
Price/Earnings (P/E) ratio is commonly used for valuing pollution control stocks.
The industry currently has a forward 12-month P/E of 22.54X compared with the S&P 500’s 22.46X. It is trading above the sector’s forward 12-month P/E of 20.97X.
Over the past five years, the industry has traded as high as 26.96X and as low as 14.23X, with the median of 18.38X, as the chart below shows.
Pollution Control Industry’s Valuation Versus S&P 500
Pollution Control Industry’s Valuation Versus Sector
Bottom Line
Increased public and commercial demand for pollution-control equipment products and services will likely continue to drive performances of the industry players. We believe that investing in the industry may prove rewarding at the moment.
We present four promising pollution control stocks, which seem to be well-positioned to capitalize on the opportunities.
A brief discussion on the chosen stocks is provided below:
CECO Environmental Corp. : The stock of this Dallas, TX-based company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Despite the company’s share price declining 31.1% over the past year, it has increased 35.7% in the past three months.
The company has an earnings surprise of 23.57%, on average, for the trailing four quarters, surpassing and missing estimates twice each. In the past 30 days, the Zacks Consensus Estimate for the company’s earnings has remained stable at 48 cents for 2020. The consensus estimate for 2021 earnings has remained unchanged at 61 cents over the same time frame.
Price and Consensus: CECE
Casella Waste Systems, Inc. (CWST - Free Report) : The stock of this Rutland, VT-based company currently carries a Zacks Rank #3 (Hold). Over the past year, the company has gained 26.9%.
Notably, the company surpassed earnings estimates thrice, while meeting once in the trailing four quarters. It boasts an earnings surprise of 72.58%, on average, for the past four quarters. In the past 30 days, the Zacks Consensus Estimate for the company’s earnings has been unchanged at 54 cents for 2020. Also, the consensus estimate for the company’s 2021 earnings has remained stable at 81 cents.
Price and Consensus: CWST
Sharps Compliance Corp. : The stock of this Houston, TX-based company currently carries a Zacks Rank #3. The company has rallied 67.1% over the past year.
The company has an earnings surprise of 62.50%, on average, for the trailing four quarters, surpassing thrice, while missing in one. In the past 30 days, the Zacks Consensus Estimate for the company’s earnings has remained stable at a penny for fiscal 2020 (ended June 2020, results are awaited). Notably, the consensus estimate for fiscal 2021 (ending June 2021) earnings has remained stable at 13 cents.
Price and Consensus: SMED
Tetra Tech, Inc. (TTEK - Free Report) : The stock of this Pasadena, CA-based company currently carries a Zacks Rank #3. Although its share price has declined 7.2% over the past year, it has gained 3.2% in the past three months.
Notably, the company surpassed earnings estimates in the trailing four quarters. It boasts an earnings surprise of 6.32%, on average, for the past four quarters. In the past 30 days, the Zacks Consensus Estimate for the company’s bottom line has improved 3% to $3.12 for fiscal 2020 (ending September 2020). The consensus estimate for fiscal 2021 (ending September 2021) earnings has remained stable at $3.23.
Price and Consensus: TTEK
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>