A prudent investment decision involves buying well-performing stocks at the right time while selling those that are at risk. A rise in share price and strong fundamentals signal a stock’s bullish run.
Clean Harbors, Inc. (CLH - Free Report) is a waste removal services stock that has performed well so far this year and has the potential to sustain the momentum in the near term. Consequently, if you haven’t taken advantage of its share price appreciation yet, it’s time you add the stock to your portfolio.
What Makes it an Attractive Pick?
An Outperformer: A glimpse at the company’s price trend reveals that the stock has had an impressive run on the bourse on a year-to-date basis. Shares of Clean Harbors have returned 29.3% on a year-to-date basis, outperforming the 7.7% rise of the industry it belongs to.
Solid Rank & VGM Score: Clean Harbors currently carries a Zacks Rank #1 (Strong Buy) and has a Value Growth Momentum Score (VGM Score) of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Northward Estimate Revisions: The direction of estimate revisions serves as an important pointer when it comes to the price of a stock. Over the last 60 days, the Zacks Consensus Estimate for the current quarter moved up 11.1%. For 2018 and 2019, the estimates moved up 37.5% and 16.1%, respectively.
Strong Growth Prospects: The Zacks Consensus Estimate for current quarter earnings is pegged at 40 cents, indicating year-over-year growth of 90.5%. Moreover, earnings are expected to register more than 100% growth in 2018 and 38.6% in 2019.
Driving Factors: Acquisitions have been contributing to Clean Harbors’ top-line growth. On Feb 23, the company completed the acquisition of the U.S. Industrial Cleaning Business of Veolia Environmental Services North America LLC (the "Veolia Business") for $120.0 million. Veolia assets contributed $63.9 million of revenues in the first half of 2018. In 2017, Clean Harbors completed four acquisitions that contributed revenues of almost $14.5 million. Additionally, the buyouts have helped the company in multiple lines of services such as waste minimization; remodeling of its fleet of trucks, growth in daylighting and hydro excavation services markets, and complement its closed loop model in relation to the sale of oil products.
Moreover, Clean Harbors looks strong on the back of its expansive infrastructure, specialized equipment, capital base and customer relationships.
The company’s focus on improving its efficiency and lowering operating costs through advanced technology, process efficiencies and stringent cost management are also appreciable. The company has a competitive advantage in terms of treatment, storage and disposal facilities (TSDFs). Hence, by setting-up additional service locations near TSDFs, it expects to minimize capital expenditures and increase its market share. This, in turn, is likely to drive additional waste into the company’s existing facilities, thereby increasing capacity utilization and enhancing overall profitability.
We are also impressed with Clean Harbors’ consistent efforts to return value to shareholders in the form of share repurchases. In the first half of 2018, Clean Harbors repurchased approximately more than 530,000 shares for $26.5 million. In 2017, 2016 and 2015, the company returned $48.9 million, $22.2 million and $73.3 million to its shareholders, respectively, through share buybacks. Such moves indicate the company’s commitment to create value for shareholders and underline its confidence in its business.
Other Stocks to Consider
Some other top-ranked stocks from the broader Business Services sector include FTI Consulting (FCN - Free Report) , CRA International and Heidrick & Struggles International (HSII - Free Report) , all sporting a Zacks Rank #1.
FTI Consulting, CRA International and Heidrick & Struggles International have delivered an average four-quarter positive earnings surprise of 58.3%, 38.6% and 17.5%, respectively.
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