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Covanta Holding's Steady Investments to Boost Portfolio

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Covanta Holding’s (CVA - Free Report) focus on developing and commercializing new technology, systematic capital expenditure and efforts to reduce long-term costs of ash disposal will act as tailwinds.

The company has a trailing four-quarter positive earnings surprise of 22.93%, on average.

What’s Aiding the Stock?

Covanta Holding has been investing substantially in purchasing property, plant and equipment to expand its infrastructure and grow its customer base. The company is making acquisitions to curb competition, increase safety and reliability of its Energy-from-Waste projects, provide solutions for solid waste and recyclable households as well as various hazardous wastes and replace aging infrastructure to modernize the system.

Moreover, to strengthen and enhance its existing operations, the company is commercializing new technologies like recycling waste, innovating alternative waste treatment processes, effecting combustion and emission controls as well as recycling, reusing or disposing residue. It is already on track to advanced its research and developmental efforts. Remarkably, Covanta Holding has patents that allow application of special technology to curb toxic emissions. Moreover, the company created more sophisticated technology for limiting pollutants, which in turn, is subject to necessary approvals.

Additionally, this year, the company expects to invest $17 million in different growth projects to ramp up its current activities including $2 million in driving international business. Further, to minimize its long-term ash disposal expense and maintain more sustainability while creating new revenue-earning opportunities, the company has been developing its first total ash processing system (TAPS).

However, higher plant operating expenses and strict laws and regulations in the United States act as headwinds. Also, heavy debt remains a concern for the company.

Zacks Rank & Price Performance

Currently, the stock carries a Zacks Rank #3 (Hold).

Shares of Covanta Holding have rallied 12.6% in the past three months compared with the industry’s growth of 8.6%.

 

Key Picks

A few better-ranked stocks in the same sector are Bloom Energy Corporation (BE - Free Report) , Enviva Partners, LP (EVA - Free Report) and Delek Logistics Partners, L.P. (DKL - Free Report) . Both Enviva Partners and Delek Logistics Partners flaunt a Zacks #1 Rank (Strong Buy) while Bloom Energy carries a Zacks #2 Rank (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Bloom Energy’s long-term earnings growth rate is pegged at 25%. Also, the company has a trailing four-quarter positive earnings surprise of 75.4%, on average.

Enviva Partners pulled off average positive earnings surprise of 14.18% in the last four quarters. The Zacks Consensus Estimate for 2020 earnings has moved 6.8% north in the past 30 days.

Delek Logistics Partners came up with average positive earnings surprise of 6.67% in the previous four quarters. The Zacks Consensus Estimate for current-year earnings has been intact in the past 30 days.

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