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4 Pollution Control Stocks to Watch on Robust Industry Trends
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The Zacks Pollution Control industry is benefiting from strong demand for air pollution control products as greenhouse gas emissions rise and associated health risks increase. Strict 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) , Fuel Tech, Inc. (FTEK - Free Report) and LiqTech International, Inc. (LIQT - 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 for 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 increasing investment in innovative technologies, improving customer and employee experience, and advancing 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 worldwide to tackle ozone depletion and protect ecosystems should continue to boost 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 for renewable energy, higher renewable investments, lower costs of generating renewable electricity and the rapid adoption of electric vehicles (EVs), have made the industry's prospects gloomy for players.
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 #45. This rank places it in the top 18% of 247 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.
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 Underperforms Sector & S&P 500
Over the past year, the Zacks Pollution Control industry has underperformed the broader Industrial Products sector and the Zacks S&P 500 composite index.
Over this period, the industry has declined 2.4% compared with the broader sector’s and the S&P 500 Index’s increase of 12.4% and 16.8%, 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 20.33X compared with the S&P 500’s 19.57X. It is also above the sector’s P/E (F12M) ratio of 19.73X.
In the past five years, the industry has traded as high as 24.52X, as low as 16.32X and at the median of 19.83X, 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. CECO’s growth is supported by broad industrial spending in power generation, gas infrastructure, LNG, semiconductors, electronics, industrial water and reshoring projects. Backlog execution on large-scale natural gas power generation 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 65.5%. Shares of the company have gained 23.9% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: CECO
LiqTech: Based in Ballerup, Denmark, LIQT is engaged in manufacturing and marketing specialized filtration products and systems in the Americas, Europe, the Asia-Pacific, the Middle East and Africa. The company also produces silicon carbide ceramic and diesel particulate filters. Solid momentum in the steel industry is supporting LiqTech’s growth. An increase in demand for other industrial water treatment applications also bodes well.
The Zacks Consensus Estimate for this Zacks Rank #2 (Buy) company’s 2026 revenues is pegged at $20 million, indicating an increase of 21.2% from the year-ago quarter’s figure.
Price and Consensus: LIQT
Donaldson: Headquartered in Bloomington, MN, Donaldson manufactures and sells filtration systems and replacement parts worldwide. Solid momentum in the aftermarket business, driven by growth across regions and both original equipment (OE) and independent channels, is supporting the company’s Mobile Solutions segment. The inclusion of Facet and healthy demand in the Power Generation business are boosting the Industrial Solutions segment’s performance.
Donaldson’s fiscal 2026 earnings are pegged at $4.34 per share, indicating an increase of 9.1% from the year-ago quarter’s figure. The Zacks Rank #3 (Hold) stock has increased 6% 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. Increased operational dispatch at legacy accounts is 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 $28.2 million, indicating an increase of 5.8% from the year-ago quarter’s figure.
View the Zacks #1 Rank List
Image: Bigstock
4 Pollution Control Stocks to Watch on Robust Industry Trends
The Zacks Pollution Control industry is benefiting from strong demand for air pollution control products as greenhouse gas emissions rise and associated health risks increase. Strict 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) , Fuel Tech, Inc. (FTEK - Free Report) and LiqTech International, Inc. (LIQT - 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 for 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 increasing investment in innovative technologies, improving customer and employee experience, and advancing 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 worldwide to tackle ozone depletion and protect ecosystems should continue to boost 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 for renewable energy, higher renewable investments, lower costs of generating renewable electricity and the rapid adoption of electric vehicles (EVs), have made the industry's prospects gloomy for players.
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 #45. This rank places it in the top 18% of 247 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.
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 Underperforms Sector & S&P 500
Over the past year, the Zacks Pollution Control industry has underperformed the broader Industrial Products sector and the Zacks S&P 500 composite index.
Over this period, the industry has declined 2.4% compared with the broader sector’s and the S&P 500 Index’s increase of 12.4% and 16.8%, 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 20.33X compared with the S&P 500’s 19.57X. It is also above the sector’s P/E (F12M) ratio of 19.73X.
In the past five years, the industry has traded as high as 24.52X, as low as 16.32X and at the median of 19.83X, 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. CECO’s growth is supported by broad industrial spending in power generation, gas infrastructure, LNG, semiconductors, electronics, industrial water and reshoring projects. Backlog execution on large-scale natural gas power generation 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 65.5%. Shares of the company have gained 23.9% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: CECO
LiqTech: Based in Ballerup, Denmark, LIQT is engaged in manufacturing and marketing specialized filtration products and systems in the Americas, Europe, the Asia-Pacific, the Middle East and Africa. The company also produces silicon carbide ceramic and diesel particulate filters. Solid momentum in the steel industry is supporting LiqTech’s growth. An increase in demand for other industrial water treatment applications also bodes well.
The Zacks Consensus Estimate for this Zacks Rank #2 (Buy) company’s 2026 revenues is pegged at $20 million, indicating an increase of 21.2% from the year-ago quarter’s figure.
Price and Consensus: LIQT
Donaldson: Headquartered in Bloomington, MN, Donaldson manufactures and sells filtration systems and replacement parts worldwide. Solid momentum in the aftermarket business, driven by growth across regions and both original equipment (OE) and independent channels, is supporting the company’s Mobile Solutions segment. The inclusion of Facet and healthy demand in the Power Generation business are boosting the Industrial Solutions segment’s performance.
Donaldson’s fiscal 2026 earnings are pegged at $4.34 per share, indicating an increase of 9.1% from the year-ago quarter’s figure. The Zacks Rank #3 (Hold) stock has increased 6% 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. Increased operational dispatch at legacy accounts is 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 $28.2 million, indicating an increase of 5.8% from the year-ago quarter’s figure.
Price and Consensus: FTEK