Contrarian Value Ideas

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Stericycle - >>> 3 Warren Buffett Stocks to Buy in September


These companies could be great long-term buys for value investors.


George Budwell

Sep 8, 2016



http://www.fool.com/investing/2016/09/08/3-warren-buffett-stocks-to-buy-in-september.aspx?source=yahoo-2&utm_campaign=article&utm_medium=feed&utm_source=yahoo-2



Trash can be treasure

One stock that fits the bill is Stericycle (NASDAQ:SRCL). It's difficult to summarize all of the services Stericycle provides, but among its chief services, it helps businesses such as hospitals, clinics and dental offices deal with the complicated and strictly regulated process of disposing of medical, hazardous, and pharmaceutical waste. As such, the company is a highly trusted provider of high-value, high-margin, outsourced services.

Stericycle helps businesses comply with standards from a wide array of regulatory agencies, such as the EPA, DEA, FDA, OSHA, DOT, HIPAA, and FACTA, among others. As regulations grew stricter and the costs of compliance skyrocketed, the number of companies competing with Stericycle dropped precipitously. The company now possesses unrivaled scale and regulatory experience in its niches.

There are a couple of growth catalysts that should benefit Stericycle and its investors. Rising costs have created an environment in which many hospitals are choosing to outsource medical waste services rather than operate their own expensive incinerators. It's easier and cheaper for Stericycle to scale up and dispose of waste from multiple hospitals than it is for individual hospitals to efficiently destroy their own waste.

Also, the company has recently begun to expand the services it offers. For example, last year, it acquired document destruction specialist Shred-It. If Stericycle can expand its customer base beyond the healthcare industry, it could open the floodgates for its top and bottom lines. However, there is a risk that if Stericycle stretches too far and can't create synergies between its offerings, it could fail to return value to shareholders.

Fortunately, as you can see in the graph below, Stericycle has a solid track record of financial performance, making this a Warren Buffett stock, in my opinion.

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