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Reasons to Add Covanta Holding (CVA) Stock to Your Portfolio

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Covanta Holding Corporation’s (CVA - Free Report) strong fundamentals, growth projections, planned capital expenditures and concerted efforts to bolster its operations make it a solid investment option.

Let’s analyze the factors that are responsible for this currently Zacks Rank #2 (Buy) stock to emerge as an ideal investment bet. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Growth Estimates

The Zacks Consensus Estimate for 2021 earnings is pegged at 21 cents per share and for revenues, stands at $2.02 billion. The estimate for earnings per share has improved 950% in the past 60 days.

The Zacks Consensus Estimate for 2022 earnings is 22 cents per share and for revenues is $2.04 billion. The estimate for earnings per share has skyrocketed 120% in the past 60 days.

Surprise History & Dividend Yield

Covanta Holding’s trailing four-quarter earnings surprise is 296.65%, on average.

Also, the company has a current dividend yield of 2.16% compared with the S&P 500 composite’s 1.29% average.

Capital Plans

In the first three months of 2021, the company invested $2 million in different growth projects. It aims to pump $20 million into different growth projects during the year to expand its existing operations including $15-million investments in strengthening its international business. Covanta Holding’s four projects in the United Kingdom or Ireland are under construction. Rookery project in the UK is expected to generate cash flow from the first quarter of 2022.

Sustainability Efforts

Covanta Holding has patents and patents pending for advances to control emissions. In January 2021, it inked a new waste disposal deal with the Town of North Hempstead for 140,000 tons, annually, for an initial five-year term with options to extend for another 10 years. The move marks a switch to the local Waste-to-Energy option, which will significantly shrink North Hempstead’s carbon footprint and play a vital role in its transition to a zero-carbon economy.

Also, to reduce its long-term cost of ash disposal and become more sustainable while creating new revenue opportunities, the company is steadily developing its first total ash processing system.

Stock Outperformance

The stock has gained 17%, outperforming the industry’s rally of 16.4% in the past six months.

Six Months Price Performance

Zacks Investment ResearchImage Source: Zacks Investment Research

VGM Score

Covanta Holding currently has a VGM Score of A. Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1 or 2 offer the best upside potential.

Other Stocks to Consider

A few other top-ranked stocks in the same sector are Imperial Oil Limited (IMO - Free Report) , Suncor Energy Inc. (SU - Free Report) and Petroleo Brasileiro S.A. (PBR - Free Report) , all stocks flaunting a Zacks Rank of 1, presently.

The Zacks Consensus Estimate for Imperial Oil, Suncor Energy and Petroleo has moved 5.2% 69.5% and 50.5% north, respectively, in the past 60 days. Further, Imperial Oil, Suncor Energy and Petroleo delivered an earnings surprise of 16.7%, 69.5% and 308.9% each, on average, in the last four quarters.

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