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Covanta Inks 5-Year Waste Disposal Deal with City of Boston

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Leading waste technology management firm, Covanta Holding Corporation (CVA - Free Report) has entered into a 5-year contract with the City of Boston to provide sustainable waste disposal services. The agreement will start from Jul 1, 2014.

Per the agreement, around 140,000 tons of waste from the City of Boston will be transported to Covanta’s MA-based Energy-from-Waste (EfW) facility annually. Covanta will treat the waste at its EfW facility and generate clean energy.

The EfW facility will generate renewable electricity for 120,000 homes in Massachusetts from the disposed waste. The EfW facilities help reduce greenhouse gas emissions of around one ton for every ton of municipal solid waste by removing methane from landfills, recovering metals for recycling and offsetting greenhouse gas production by generating electricity from fossil fuel.

Covanta provides sustainable waste management and energy solutions through 45 EfW facilities. The company’s modern EfW facilities have the capacity to convert roughly 20 million tons of waste into clean renewable electricity which can power one million homes annually. In addition, the facilities are capable of recycling over 440,000 tons of metal every year.

Covanta has a significant presence in Massachusetts with four EfW facilities and seven transfer stations. Covanta’s established service standards helped the company to strike a partnership with the City of Boston. Importantly, this latest contract forms part of the 14-year business alliance between Covanta and the City of Boston.

In Apr 2014, Covanta announced a partnership with nine Western Massachusetts municipalities to provide a wide range of sustainable waste management services. The partnership will start operations from Jul 2014.

Notably, Covanta continues to generate stable revenues from its waste and services operations. In first-quarter 2014, the company’s waste and service revenues totaled $221 million, up 7.8% year over year. The company expects waste and services revenues in the range of $915–$940 in 2014.

To maintain and expand operations at the EfW facilities, Covanta plans to invest $230 - $240 million this year. The signing of long-term agreements with several government establishments and private entities will ensure stable cash inflow for Covanta, which will subsequently support its future capital spending program.

Covanta currently has a Zacks Rank #1 (Strong Buy). Other stocks worth considering in the same sector include US Ecology, Inc. (ECOL - Free Report) , Waste Connections Inc. (WCN - Free Report) and Waste Management, Inc. (WM - Free Report) . US Ecology sports a Zacks Rank #1 (Strong Buy) while Waste Connections and Waste Management hold a Zacks Rank #2 (Buy).

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