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4 Stocks to Outshine in the Thriving Pollution Control Industry
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The Zacks Pollution Control industry seems to be gaining from higher adoption of pollution-abatement equipment in several industries, rise in pollution-related health concerns and industrialization in several countries. Also, addition of rigs by shale drillers amid recovery in oil prices and increase in economic activities are likely to benefit the industry.
Industry players like Tetra Tech, Inc. (TTEK - Free Report) , Energy Recovery, Inc. (ERII - Free Report) , Heritage-Crystal Clean, Inc and Sharps Compliance Corp are poised to capitalize on the opportunities. However, rising preference for alternative fuels and high costs related to frequent upgradation of products have marred the outlook of the industry participants.
About the Industry
The Zacks Pollution Control industry includes companies that provide innovative filtration systems, replacement parts, solutions for managing medical wastes, energy recovery devices and other products. These 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.
3 Trends Shaping the Future of Pollution Control Industry
Strong Demand Environment: Growth in demand for pollution abatement technologies and services across manufacturing plants to meet regulatory compliances is boosting prospects of the industry participants. It’s worth noting here that several industry players have been successfully marketing their technologies in several European countries, thanks to the European Union's Industrial Emissions Directive in BAT Reference Documents (“BREFs”). Also, rising pollution-related health concerns along with higher infrastructure-related work in the United States and rapid urbanization in several developing countries are driving demand for pollution control equipment. In addition, companies engaged in providing medical, pharmaceutical and hazardous waste management services are also poised to benefit from surge in global demand for these services amid the coronavirus outbreak.
Addition of Oil Rigs: The recovery of oil prices with steady improvement in global economic activities have made shale drillers to consider adding rigs. This implies the possibility of more oil production, thereby spurring demand for pollution control equipment and services. In addition to this, the requirement for engineering and assessment services in disaster-related work is creating a favorable demand environment for industry players.
Existing Woes: Growing popularity of alternative fuels for power generation to reduce dependency on coal, particularly across developed countries, has been limiting demand for pollution control products and services. In addition, the pollution control equipment manufacturers are required to invest frequently to upgrade products and services, based on the guidelines of the pollution control boards in several countries. However, such frequent investments often hurt profitability and margins of industry participants. In addition, shortage of skilled workers in the United States is a persistent concern.
Zacks Industry Rank Indicates Solid 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 #82, which places it at the top 32% 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.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of the positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are keeping more faith with this group's earnings growth potential. Notably, the industry’s earnings estimates for the current year are up 8.4% since May-end last year.
Before we discuss a few stocks from the industry, it’s worth taking a look at the industry’s shareholder returns and its current valuation
Industry Outperforms S&P 500 & Underperforms Sector
While, the Zacks Pollution Control industry has outperformed the S&P 500, it has underperformed its sector in the past year. Notably, the stocks in this industry have collectively gained 66.2%, whereas the S&P 500 has moved up 53.5%. The Zacks Industrial Products sector has increased 114.5% over the same time frame.
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 30.7X compared with the S&P 500’s 22.67X. It is also trading above the sector’s forward 12-month P/E of 22.94X.
Over the past five years, the industry has traded as high as 30.7X and as low as 16.28X, with the median of 19.18X, as the chart below shows.
Pollution Control Industry’s Valuation Versus S&P 500
Pollution Control Industry’s Valuation Versus Sector
4 Pollution Control Stocks to Consider
Below, we have discussed four stocks from the industry, which seem to be well-positioned to capitalize on the opportunities present in the industry. The stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Tetra Tech: The Pasadena, CA-based company is a leading provider of consulting, construction management, engineering, program management and technical services. It is poised to benefit from its diverse business structure, focus on providing high-end consulting, design and engineering services as well as strength in businesses.
The company’s shares have increased 77.4% in the past year. Notably, it surpassed earnings estimates in each of the last four quarters. It has a trailing four-quarter earnings surprise of 9.42%, on average. Although, the Zacks Consensus Estimate for the company’s bottom line has remained stable for fiscal 2021 (ending September 2021), the same for fiscal 2022 (ending September 2022) earnings has increased 0.3% in the past 30 days.
Price and Consensus: TTEK
Energy Recovery: Headquartered in San Leandro, CA, this company is a leading global developer and manufacturer of highly-efficient energy recovery devices utilized in the water desalination industry. The company stands to gain from strength in its desalination business, new product innovations and a solid pipeline of projects in the quarters ahead.
The company’s shares have gained 158.9% in the past year. In the trailing four quarters, it beat earnings estimates thrice, while missing once. It has a trailing four-quarter earnings surprise of 232.08%, on average. Although the company’s earnings estimates have declined 16.7% for 2021, the same for first-quarter 2021 has increased 700% in the past 30 days.
Price and Surprise: ERII
Heritage-Crystal Clean: Based in Elgin, IL, the company offers parts cleaning as well as hazardous and non-hazardous waste services to small and mid-sized customers in North America. The company stands to benefit from strength in its containerized waste, antifreeze and vacuum services businesses.
The company’s shares have rallied 67% in the past year. It surpassed earnings estimates thrice, and missed once in the last four quarters. It has a trailing four-quarter earnings surprise of 74.45%, on average. Notably, the company’s earnings estimates have increased 27.1% for 2021, while that for 2022 has increased 3.6% in the past 30 days.
Price and Surprise: HCCI
Sharps Compliance: Based in Houston, TX, the company is a leading provider of cost-effective disposal solutions for small-quantity generators of medical waste. It also offers a number of products specifically designed for the home healthcare market. It is likely to benefit from its strong portfolio of products, strength in its businesses and growing demand for waste management services.
Sharps Compliance’s shares have rallied 88.5% in the past year. The company has a trailing four-quarter earnings surprise of 231.67%, on average. The bottom line surpassed estimates and missed the same twice each. In the past 30 days, the Zacks Consensus Estimate for the company’s earnings has increased 19.4% for fiscal 2021 (ended June 2021), while the same for fiscal 2022 (ending June 2022) improved 10%.
Price and Consensus: SMED
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
Image: Bigstock
4 Stocks to Outshine in the Thriving Pollution Control Industry
The Zacks Pollution Control industry seems to be gaining from higher adoption of pollution-abatement equipment in several industries, rise in pollution-related health concerns and industrialization in several countries. Also, addition of rigs by shale drillers amid recovery in oil prices and increase in economic activities are likely to benefit the industry.
Industry players like Tetra Tech, Inc. (TTEK - Free Report) , Energy Recovery, Inc. (ERII - Free Report) , Heritage-Crystal Clean, Inc and Sharps Compliance Corp are poised to capitalize on the opportunities. However, rising preference for alternative fuels and high costs related to frequent upgradation of products have marred the outlook of the industry participants.
About the Industry
The Zacks Pollution Control industry includes companies that provide innovative filtration systems, replacement parts, solutions for managing medical wastes, energy recovery devices and other products. These 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.
3 Trends Shaping the Future of Pollution Control Industry
Strong Demand Environment: Growth in demand for pollution abatement technologies and services across manufacturing plants to meet regulatory compliances is boosting prospects of the industry participants. It’s worth noting here that several industry players have been successfully marketing their technologies in several European countries, thanks to the European Union's Industrial Emissions Directive in BAT Reference Documents (“BREFs”). Also, rising pollution-related health concerns along with higher infrastructure-related work in the United States and rapid urbanization in several developing countries are driving demand for pollution control equipment. In addition, companies engaged in providing medical, pharmaceutical and hazardous waste management services are also poised to benefit from surge in global demand for these services amid the coronavirus outbreak.
Addition of Oil Rigs: The recovery of oil prices with steady improvement in global economic activities have made shale drillers to consider adding rigs. This implies the possibility of more oil production, thereby spurring demand for pollution control equipment and services. In addition to this, the requirement for engineering and assessment services in disaster-related work is creating a favorable demand environment for industry players.
Existing Woes: Growing popularity of alternative fuels for power generation to reduce dependency on coal, particularly across developed countries, has been limiting demand for pollution control products and services. In addition, the pollution control equipment manufacturers are required to invest frequently to upgrade products and services, based on the guidelines of the pollution control boards in several countries. However, such frequent investments often hurt profitability and margins of industry participants. In addition, shortage of skilled workers in the United States is a persistent concern.
Zacks Industry Rank Indicates Solid 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 #82, which places it at the top 32% 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.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of the positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are keeping more faith with this group's earnings growth potential. Notably, the industry’s earnings estimates for the current year are up 8.4% since May-end last year.
Before we discuss a few stocks from the industry, it’s worth taking a look at the industry’s shareholder returns and its current valuation
Industry Outperforms S&P 500 & Underperforms Sector
While, the Zacks Pollution Control industry has outperformed the S&P 500, it has underperformed its sector in the past year. Notably, the stocks in this industry have collectively gained 66.2%, whereas the S&P 500 has moved up 53.5%. The Zacks Industrial Products sector has increased 114.5% over the same time frame.
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 30.7X compared with the S&P 500’s 22.67X. It is also trading above the sector’s forward 12-month P/E of 22.94X.
Over the past five years, the industry has traded as high as 30.7X and as low as 16.28X, with the median of 19.18X, as the chart below shows.
Pollution Control Industry’s Valuation Versus S&P 500
Pollution Control Industry’s Valuation Versus Sector
4 Pollution Control Stocks to Consider
Below, we have discussed four stocks from the industry, which seem to be well-positioned to capitalize on the opportunities present in the industry. The stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Tetra Tech: The Pasadena, CA-based company is a leading provider of consulting, construction management, engineering, program management and technical services. It is poised to benefit from its diverse business structure, focus on providing high-end consulting, design and engineering services as well as strength in businesses.
The company’s shares have increased 77.4% in the past year. Notably, it surpassed earnings estimates in each of the last four quarters. It has a trailing four-quarter earnings surprise of 9.42%, on average. Although, the Zacks Consensus Estimate for the company’s bottom line has remained stable for fiscal 2021 (ending September 2021), the same for fiscal 2022 (ending September 2022) earnings has increased 0.3% in the past 30 days.
Price and Consensus: TTEK
Energy Recovery: Headquartered in San Leandro, CA, this company is a leading global developer and manufacturer of highly-efficient energy recovery devices utilized in the water desalination industry. The company stands to gain from strength in its desalination business, new product innovations and a solid pipeline of projects in the quarters ahead.
The company’s shares have gained 158.9% in the past year. In the trailing four quarters, it beat earnings estimates thrice, while missing once. It has a trailing four-quarter earnings surprise of 232.08%, on average. Although the company’s earnings estimates have declined 16.7% for 2021, the same for first-quarter 2021 has increased 700% in the past 30 days.
Price and Surprise: ERII
Heritage-Crystal Clean: Based in Elgin, IL, the company offers parts cleaning as well as hazardous and non-hazardous waste services to small and mid-sized customers in North America. The company stands to benefit from strength in its containerized waste, antifreeze and vacuum services businesses.
The company’s shares have rallied 67% in the past year. It surpassed earnings estimates thrice, and missed once in the last four quarters. It has a trailing four-quarter earnings surprise of 74.45%, on average. Notably, the company’s earnings estimates have increased 27.1% for 2021, while that for 2022 has increased 3.6% in the past 30 days.
Price and Surprise: HCCI
Sharps Compliance: Based in Houston, TX, the company is a leading provider of cost-effective disposal solutions for small-quantity generators of medical waste. It also offers a number of products specifically designed for the home healthcare market. It is likely to benefit from its strong portfolio of products, strength in its businesses and growing demand for waste management services.
Sharps Compliance’s shares have rallied 88.5% in the past year. The company has a trailing four-quarter earnings surprise of 231.67%, on average. The bottom line surpassed estimates and missed the same twice each. In the past 30 days, the Zacks Consensus Estimate for the company’s earnings has increased 19.4% for fiscal 2021 (ended June 2021), while the same for fiscal 2022 (ending June 2022) improved 10%.
Price and Consensus: SMED
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 3 crypto-related stocks now >>