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4 Pollution Control Stocks to Watch on Robust Industry Trends
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The Zacks Pollution Control industry is poised to gain from the solid demand for air pollution control products due to rising greenhouse gas emissions and health-related risks associated with them. Stringent regulations and emission standards enacted by countries globally should continue to drive demand for industry participants.
However, the growing adoption of renewable sources of energy with a rising preference for alternative fuels has marred the outlook of the industry. Donaldson Company, Inc. (DCI - Free Report) , CECO Environmental Corp. (CECO - Free Report) , Energy Recovery, Inc. (ERII - Free Report) and Fuel Tech, Inc. (FTEK - Free Report) are likely to capitalize on these opportunities.
About the Industry
The Zacks Pollution Control industry comprises companies engaged in providing innovative filtration systems, replacement parts, solutions for managing medical wastes, energy recovery devices and other products. These products are primarily used in the commercial, automotive repair, industrial, home healthcare, retail, construction, pharmaceutical and hospitality end markets. A few industry participants offer solutions to deal with industrial waste and commercial chemical products and technologies to tackle air pollution. One of the companies also delivers services related to infrastructure, water, resource management, energy, etc., to government and commercial clients. These companies are enhancing investments in developing innovative technologies, improving customer and employee experience and enhancing supply-chain modernization programs.
Major Trends Shaping the Future of the Pollution Control Industry
Strong Demand for Air Pollution Control: Rapid urbanization and the consequent rise in greenhouse gas emissions from the industrial sector have been driving demand for air quality control systems. Increasing public awareness of the health-related risks associated with air pollution is fueling market growth. Also, the expansion of infrastructure-related projects in developing countries is boosting the demand for pollution abatement equipment and technologies.
Stringent Government Regulations: Strict emission standards and related laws implemented by countries across the globe to tackle the depletion of the ozone layer and the ecosystem should continue to augment the demand for pollution-control equipment. Europe has some of the strictest pollution control laws in place. Solid demand for medical, pharmaceutical and hazardous waste management services is boosting the prospects of some industry participants. Also, increased usage of Artificial Intelligence (AI) and the Internet of Things (IoT) in industrial processes has been enabling several industrial companies to monitor and identify the source of air pollution in real time, thus driving demand for pollution abatement technologies.
Emergence of Alternative Sources of Energy: The growing preference for renewable energy sources for power generation to reduce dependency on coal in the United States and other developed countries across the world is restraining the demand for industrial emission-abatement products and technologies. Several factors, including supportive government policies related to renewable energy, higher renewable investments, a reduction in the overall costs of generating renewable electricity and the rapid adoption of electric vehicles (EVs), have made the prospects of the industry players gloomy.
Zacks Industry Rank Indicates Solid Prospects
The Zacks Pollution Control industry, housed within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #61. This rank places it in the top 25% of 245 Zacks industries.
The group’s Zacks Industry Rank, 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 outperform the bottom 50% by a factor of more than two to one.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of the robust earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are keeping more faith in this group's earnings growth potential. The industry’s earnings estimates for 2026 have increased 2.7% since the end of May 2025.
Given the upbeat near-term prospects of the industry, we will present a few stocks that you may want to consider for your portfolio. But it is worth looking at the industry’s shareholder returns and current valuation first.
Industry Outperforms Sector & S&P 500
Over the past year, the Zacks Pollution Control industry has outperformed the broader Industrial Products sector and the Zacks S&P 500 composite index.
Over this period, the industry has surged 41.8% compared with the broader sector’s and the S&P 500 Index’s increase of 35% and 33.9%, respectively.
One-Year Price Performance
Industry's Current Valuation
Based on the forward P/E (F12M), a commonly used multiple for valuing pollution control stocks, the industry is currently trading at 20.63X compared with the S&P 500’s 21.98X. It is below the sector’s P/E (F12M) ratio of 22.34X.
In the past five years, the industry has traded as high as 24.50X, as low as 16.32X and at the median of 19.81X, as the chart below shows:
Price-to-Earnings Ratio vs. SP500
Price-to-Earnings Ratio vs. Sector
4 Pollution Control Stocks to Keep a Tab on
CECO Environmental: Headquartered in Dallas, TX, this is an environmentally-focused industrial company that provides critical solutions in industrial air quality, industrial water treatment and energy transition worldwide. Backlog execution on industrial and ducting application is supporting its growth. Backlog execution on large-scale power projects within the Engineered Systems segment also bodes well. CECO currently sports a Zacks Rank #1 (Strong Buy).
CECO Environmental’s earnings surpassed the Zacks Consensus Estimate twice in the preceding four quarters and missed in the other two, the average surprise being 46.5%. Shares of the company have gained 207.3% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: CECO
Donaldson: Headquartered in Bloomington, MN, Donaldson is engaged in the manufacturing and selling of filtration systems and replacement parts across the world. Solid momentum in the aftermarket business, driven by higher vehicle utilization rates in Europe, the Middle East and Africa (EMEA) and Asia Pacific (APAC), is supporting the company’s Mobile Solutions segment. An increase in demand for products in the power generation end market is boosting the Industrial Solutions segment’s performance.
Donaldson’s fiscal 2026 earnings are pegged at $3.97 per share, indicating an increase of 7.9% from the year-ago quarter’s figure. The Zacks Rank #3 (Hold) stock has surged 29.1% in the past year.
Price and Consensus: DCI
Fuel Tech: Based in Warrenville, IL, FTEK develops technology for air pollution control and provides process optimization, water treatment and advanced engineering services. Renewed orders from previously dormant customers are aiding its FUEL CHEM segment. The Zacks Rank #3 company’s business development activities, with an increased focus on global emission protocols across a variety of fuel sources, should also drive its growth in the quarters ahead.
The Zacks Consensus Estimate for FTEK’s 2026 revenues is pegged at $29.9 million, indicating an increase of 11.9% from the year-ago quarter’s figure. The stock has surged 72.6% in the past year.
Price and Consensus: FTEK
Energy Recovery: Based in San Leandro, CA, the company is engaged in manufacturing and designing energy efficiency technology solutions utilized in the water desalination industry. Energy Recovery is poised to benefit from strength in its original equipment manufacturer business, driven by higher shipments of products to the Middle East and Europe markets. New product introductions and a strong pipeline of projects also bode well for it.
The Zacks Consensus Estimate for this Zacks Rank #3 company’s 2026 earnings is pegged at 59 cents per share, indicating an increase of 1.7% from the year-ago quarter’s figure. Though shares of this company have declined 26.1% in a year, the same increased 5.5% in the past month.
Price and Consensus: ERII
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4 Pollution Control Stocks to Watch on Robust Industry Trends
The Zacks Pollution Control industry is poised to gain from the solid demand for air pollution control products due to rising greenhouse gas emissions and health-related risks associated with them. Stringent regulations and emission standards enacted by countries globally should continue to drive demand for industry participants.
However, the growing adoption of renewable sources of energy with a rising preference for alternative fuels has marred the outlook of the industry. Donaldson Company, Inc. (DCI - Free Report) , CECO Environmental Corp. (CECO - Free Report) , Energy Recovery, Inc. (ERII - Free Report) and Fuel Tech, Inc. (FTEK - Free Report) are likely to capitalize on these opportunities.
About the Industry
The Zacks Pollution Control industry comprises companies engaged in providing innovative filtration systems, replacement parts, solutions for managing medical wastes, energy recovery devices and other products. These products are primarily used in the commercial, automotive repair, industrial, home healthcare, retail, construction, pharmaceutical and hospitality end markets. A few industry participants offer solutions to deal with industrial waste and commercial chemical products and technologies to tackle air pollution. One of the companies also delivers services related to infrastructure, water, resource management, energy, etc., to government and commercial clients. These companies are enhancing investments in developing innovative technologies, improving customer and employee experience and enhancing supply-chain modernization programs.
Major Trends Shaping the Future of the Pollution Control Industry
Strong Demand for Air Pollution Control: Rapid urbanization and the consequent rise in greenhouse gas emissions from the industrial sector have been driving demand for air quality control systems. Increasing public awareness of the health-related risks associated with air pollution is fueling market growth. Also, the expansion of infrastructure-related projects in developing countries is boosting the demand for pollution abatement equipment and technologies.
Stringent Government Regulations: Strict emission standards and related laws implemented by countries across the globe to tackle the depletion of the ozone layer and the ecosystem should continue to augment the demand for pollution-control equipment. Europe has some of the strictest pollution control laws in place. Solid demand for medical, pharmaceutical and hazardous waste management services is boosting the prospects of some industry participants. Also, increased usage of Artificial Intelligence (AI) and the Internet of Things (IoT) in industrial processes has been enabling several industrial companies to monitor and identify the source of air pollution in real time, thus driving demand for pollution abatement technologies.
Emergence of Alternative Sources of Energy: The growing preference for renewable energy sources for power generation to reduce dependency on coal in the United States and other developed countries across the world is restraining the demand for industrial emission-abatement products and technologies. Several factors, including supportive government policies related to renewable energy, higher renewable investments, a reduction in the overall costs of generating renewable electricity and the rapid adoption of electric vehicles (EVs), have made the prospects of the industry players gloomy.
Zacks Industry Rank Indicates Solid Prospects
The Zacks Pollution Control industry, housed within the broader Zacks Industrial Products sector, currently carries a Zacks Industry Rank #61. This rank places it in the top 25% of 245 Zacks industries.
The group’s Zacks Industry Rank, 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 outperform the bottom 50% by a factor of more than two to one.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of the robust earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are keeping more faith in this group's earnings growth potential. The industry’s earnings estimates for 2026 have increased 2.7% since the end of May 2025.
Given the upbeat near-term prospects of the industry, we will present a few stocks that you may want to consider for your portfolio. But it is worth looking at the industry’s shareholder returns and current valuation first.
Industry Outperforms Sector & S&P 500
Over the past year, the Zacks Pollution Control industry has outperformed the broader Industrial Products sector and the Zacks S&P 500 composite index.
Over this period, the industry has surged 41.8% compared with the broader sector’s and the S&P 500 Index’s increase of 35% and 33.9%, respectively.
One-Year Price Performance
Industry's Current Valuation
Based on the forward P/E (F12M), a commonly used multiple for valuing pollution control stocks, the industry is currently trading at 20.63X compared with the S&P 500’s 21.98X. It is below the sector’s P/E (F12M) ratio of 22.34X.
In the past five years, the industry has traded as high as 24.50X, as low as 16.32X and at the median of 19.81X, as the chart below shows:
Price-to-Earnings Ratio vs. SP500
Price-to-Earnings Ratio vs. Sector
4 Pollution Control Stocks to Keep a Tab on
CECO Environmental: Headquartered in Dallas, TX, this is an environmentally-focused industrial company that provides critical solutions in industrial air quality, industrial water treatment and energy transition worldwide. Backlog execution on industrial and ducting application is supporting its growth. Backlog execution on large-scale power projects within the Engineered Systems segment also bodes well. CECO currently sports a Zacks Rank #1 (Strong Buy).
CECO Environmental’s earnings surpassed the Zacks Consensus Estimate twice in the preceding four quarters and missed in the other two, the average surprise being 46.5%. Shares of the company have gained 207.3% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: CECO
Donaldson: Headquartered in Bloomington, MN, Donaldson is engaged in the manufacturing and selling of filtration systems and replacement parts across the world. Solid momentum in the aftermarket business, driven by higher vehicle utilization rates in Europe, the Middle East and Africa (EMEA) and Asia Pacific (APAC), is supporting the company’s Mobile Solutions segment. An increase in demand for products in the power generation end market is boosting the Industrial Solutions segment’s performance.
Donaldson’s fiscal 2026 earnings are pegged at $3.97 per share, indicating an increase of 7.9% from the year-ago quarter’s figure. The Zacks Rank #3 (Hold) stock has surged 29.1% in the past year.
Price and Consensus: DCI
Fuel Tech: Based in Warrenville, IL, FTEK develops technology for air pollution control and provides process optimization, water treatment and advanced engineering services. Renewed orders from previously dormant customers are aiding its FUEL CHEM segment. The Zacks Rank #3 company’s business development activities, with an increased focus on global emission protocols across a variety of fuel sources, should also drive its growth in the quarters ahead.
The Zacks Consensus Estimate for FTEK’s 2026 revenues is pegged at $29.9 million, indicating an increase of 11.9% from the year-ago quarter’s figure. The stock has surged 72.6% in the past year.
Price and Consensus: FTEK
Energy Recovery: Based in San Leandro, CA, the company is engaged in manufacturing and designing energy efficiency technology solutions utilized in the water desalination industry. Energy Recovery is poised to benefit from strength in its original equipment manufacturer business, driven by higher shipments of products to the Middle East and Europe markets. New product introductions and a strong pipeline of projects also bode well for it.
The Zacks Consensus Estimate for this Zacks Rank #3 company’s 2026 earnings is pegged at 59 cents per share, indicating an increase of 1.7% from the year-ago quarter’s figure. Though shares of this company have declined 26.1% in a year, the same increased 5.5% in the past month.
Price and Consensus: ERII