Saturday, April 08, 2023 1:42:31 PM
>>> 11 Best Recycling Stocks To Buy Now
Insider Monkey
by Hamna Asim
December 21, 2022
https://finance.yahoo.com/news/11-best-recycling-stocks-buy-165844433.html
In this article, we discuss 11 best recycling stocks to buy now. If you want to see more stocks in this selection, check out 5 Best Recycling Stocks To Buy Now.
The global waste recycling services market was valued at $57.69 billion in 2021 and is expected to be worth $88.01 billion by 2030, indicating a compound annual growth rate of 4.8% during the forecast period of 2022 to 2030. The high volume of global economic activities has heightened the demand for recycling of waste materials.
The recycling sector has become an integral part of the urban infrastructure since it ensures the protection of both the human health and environment. In addition to higher urbanization and the expanding industrial sector, the growing agricultural production leads to more wastage from the agro-industries, thus driving the demand for the waste recycling services across the globe.
There are new entrants looking to resolve the lags in the waste management and recycling industry. For example, solar panels are considered green hardware, but older versions of panels are turning into hazardous waste. Thus, a California-based startup, SolarCycle, is using that waste by recycling parts of the older panels and disposing them off for profit. SolarCycle asserts that it can cheaply extract about 95% of the important materials in solar panels, like silver, silicon, copper, and aluminum. These can then be recycled or repurposed, resulting in an efficient circular solar economy.
Some of the best recycling stocks to invest in include Waste Connections, Inc. (NYSE:WCN), Waste Management, Inc. (NYSE:WM), and Republic Services, Inc. (NYSE:RSG).
Our Methodology
We selected the following recycling stocks based on positive analyst coverage, strong business fundamentals, and market visibility. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. The list is arranged according to the number of hedge fund holders in each firm.
Best Recycling Stocks To Buy Now
11. Montrose Environmental Group, Inc. (NYSE:MEG)
Number of Hedge Fund Holders: 8
Montrose Environmental Group, Inc. (NYSE:MEG) was founded in 2012 and is headquartered in North Little Rock, Arkansas. It is an environmental services company in the United States, operating through three segments – Assessment, Permitting and Response, Measurement and Analysis, and Remediation and Reuse. It provides its services to the technology, media, chemical, energy, power and utility, industrial and manufacturing, financial, and engineering industries, as well as local, state, provincial, and federal government entities.
On December 12, BofA analyst Andrew Obin upgraded Montrose Environmental Group, Inc. (NYSE:MEG) to Buy from Neutral, citing a forecast for accelerating earnings growth in 2023. Montrose Environmental Group (NYSE:MEG) stock also rose on December 12 after the company announced it had acquired Huco Consulting, a company focused on safety and ESG goals, to expand its range of environmental services.
According to Insider Monkey’s data, 8 hedge funds were bullish on Montrose Environmental Group, Inc. (NYSE:MEG) at the end of the third quarter of 2022, compared to 9 funds in the last quarter. Richard Driehaus’ Driehaus Capital is the largest stakeholder of the company, with 342,461 shares worth $11.5 million.
Like Waste Connections, Inc. (NYSE:WCN), Waste Management, Inc. (NYSE:WM), and Republic Services, Inc. (NYSE:RSG), Montrose Environmental Group, Inc. (NYSE:MEG) is one of the best recycling stocks to consider buying.
Here is what Baron Funds specifically said about Montrose Environmental Group, Inc. (NYSE:MEG) in its Q2 2022 investor letter:
“Montrose Environmental Group, Inc.(NYSE:MEG), an environmental services company, underperformed during the quarter. Despite reiterating guidance for 2022, Montrose underperformed as the market penalized high-growth companies generally. We continue to remain positive on the company’s prospects and ability to achieve or beat its long-term growth target of over 20% per year. We remain particularly excited about Montrose’s potential to benefit from increased government regulation around PFAS chemical contamination and methane emissions.”
10. Quest Resource Holding Corporation (NASDAQ:QRHC)
Number of Hedge Fund Holders: 9
Quest Resource Holding Corporation (NASDAQ:QRHC) is a Texas-based company that provides solutions for the reuse, recycling, and disposal of waste streams and recyclables in the United States. It offers disposal and recycling services for motor oil and automotive lubricants, oil filters, scrap tires, goods destruction, food waste, plastics, cardboard, metal, glass, mixed paper, construction debris, and regulated and non-regulated solid, liquid, and gas wastes. Even without gaining new clients, existing customers will likely expand operations and require more waste services, making Quest Resource Holding Corporation (NASDAQ:QRHC) one of the premier recycling stocks to invest in.
On April 18, EF Hutton analyst Chip Moore initiated coverage of Quest Resource Holding Corporation (NASDAQ:QRHC) with a Buy rating and a $13 price target. As a leading national provider of waste and recycling solutions, Quest Resource Holding Corporation (NASDAQ:QRHC) is "differentiated" by its asset-light, national footprint, and ability to handle comprehensive waste streams, the analyst told investors. He noted that the company has also developed "valuable" data warehousing capabilities, offering full waste-stream services for its clients.
According to Insider Monkey’s data, 9 hedge funds were long Quest Resource Holding Corporation (NASDAQ:QRHC) at the end of September 2022, with collective stakes worth $29.5 million, compared to 7 funds in the prior quarter worth $14.7 million. Nelson Obus’ Wynnefield Capital is the leading position holder in the company, with 2.5 million shares worth $21.7 million.
Here is what Long Cast Advisor specifically said about Quest Resource Holding Corporation (NASDAQ:QRHC) in its Q2 2022 investor letter:
“Quest Resource Holding Corporation (NASDAQ:QRHC) borrowed heavily to purchase Rome RWS, Inc., and with results from the acquired company not yet fully on the income statement, the debt ratios expanded and equity valuations declined. Management – and really the Board – is undertaking a high skill maneuver of integrating its largest acquisition to date, carrying an unprecedented level of debt all concurrent with the long planned retirement of the long tenured CFO. It’s a little more exciting than necessary but the valuation is undemanding and the opportunity set is quite large.
Since I’ve long written about what this company could look like if it leaned more deeply into utilizing technology within its two-sided marketplace, I’ll be closely following the XPO Logistics (XPO) spinoff of the truck brokerage business, expected in 4Q22. Truck and waste brokerage share some similar dynamics and as I’ve long noted, the technologist at XPO worked at Oakleaf concurrently with QRHC CEO Ray Hatch. Technology was a big enabling factor at Oakleaf and in XPO’s +10x growth. I think it would have a similar function for QRHC were management to wisely invest time and resources in its development.”
9. Li-Cycle Holdings Corp. (NYSE:LICY)
Number of Hedge Fund Holders: 15
Li-Cycle Holdings Corp. (NYSE:LICY) is headquartered in Toronto, Ontario, and the company engages in the lithium-ion battery resource recovery and lithium-ion battery recycling business in North America. On October 13, the company announced that it has initiated commercial operations at its lithium-ion battery recycling facility in Alabama. The facility, which is based in Tuscaloosa, uses patented technology to recycle and directly process full EV battery packs without any dismantling through a submerged shredding process that produces no wastewater. Li-Cycle Holdings Corp. (NYSE:LICY) is one of the premier recycling stocks to invest in.
On December 15, ??Citi analyst P.J. Juvekar maintained a Buy recommendation on Li-Cycle Holdings Corp. (NYSE:LICY) but lowered the firm's price target on the shares to $7.50 from $8. The analyst observed that while there is an inclination to go back to cyclical chemical names after having lagged in 2022, he has decided to "stay defensive" going into 2023.
According to Insider Monkey’s data, 15 hedge funds were long Li-Cycle Holdings Corp. (NYSE:LICY) at the end of September 2022, and Zilvinas Mecelis’ Covalis Capital is the leading position holder in the company, with 11.6 million shares worth $61.8 million.
8. Heritage-Crystal Clean, Inc (NASDAQ:HCCI)
Number of Hedge Fund Holders: 19
Heritage-Crystal Clean, Inc (NASDAQ:HCCI) is an Illinois-based company that provides parts cleaning, hazardous and non-hazardous waste, and used oil collection services to small and mid-sized customers in the industrial and vehicle maintenance sectors in the United States and Canada. The company also provides containerized waste management, wastewater vacuum, antifreeze recycling, and field services. Heritage-Crystal Clean, Inc (NASDAQ:HCCI) is one of the leading recycling stocks to invest in.
On October 19, Heritage-Crystal Clean, Inc (NASDAQ:HCCI) reported Q3 non-GAAP earnings per share of $1.01 and a revenue of $172.22 million, outperforming Wall Street estimates by $0.21 and $17.23 million, respectively. The Q3 revenue increased nearly 40% compared to the prior-year quarter.
Needham analyst James Ricchiuti on October 21 maintained a Buy rating on Heritage-Crystal Clean, Inc (NASDAQ:HCCI) but trimmed the firm's price target on the shares to $40 from $43 as he noted that the company delivered "another impressive quarterly report." Oil business margins are forecasted to shrink in Q4 as a result of downtime in Heritage-Crystal Clean, Inc (NASDAQ:HCCI)’s refinery, which may have contributed to the pullback in shares, but it is "unwarranted," the analyst wrote in a research note.
According to Insider Monkey’s data, 19 hedge funds were long Heritage-Crystal Clean, Inc (NASDAQ:HCCI) at the end of September 2022, compared to 16 funds in the last quarter. Chuck Royce’s Royce & Associates is the largest stakeholder of the company, with 1.15 million shares worth $34 million.
Meridian Funds made the following comment about Heritage-Crystal Clean, Inc (NASDAQ:HCCI) in its Q3 2022 investor letter:
“Heritage-Crystal Clean, Inc (NASDAQ:HCCI) is an environmental services company focused on machine parts cleaning, used oil collection, oil re-refining, and hazardous and non-hazardous waste services. Our rationale for investing in this company includes the recurring revenue stream it generates from its environmental services business unit and substantial growth opportunities in the re-refinery and used oil collection segments. Continued strong execution and higher oil prices contributed to the stock’s solid performance during the period. Notably, Heritage-Crystal Clean’s oil business segment generated record revenue in the second quarter and saw segment margins improve to 41%, as the spread between base oil sales and the cost of collecting used oil widened. The company’s core environmental services segment also recorded record quarterly revenue. We believe the environmental, social, and governance (ESG) story at Heritage remains under appreciated by the market as the company collects used motor oil and recycles it for reuse. We have high conviction in the long-term growth story for the company, but trimmed our position in the stock during the period as the share price appreciated.”
7. PureCycle Technologies, Inc. (NASDAQ:PCT)
Number of Hedge Fund Holders: 23
PureCycle Technologies, Inc. (NASDAQ:PCT) was founded in 2015 and is headquartered in Orlando, Florida. The company produces recycled polypropylene (PP) and holds a license for restoring waste PP into ultra-pure recycled resin. Its recycling process separates color, odor, and other contaminants from plastic waste feedstock to turn it into virgin-like resin. PureCycle Technologies, Inc. (NASDAQ:PCT) is one of the best recycling stocks to consider. At the end of September 30, the company had total liquidity of $416.1 million, including $215.0 million of cash, cash equivalents, and debt securities available for sale and $201.1 million in restricted cash.
On November 11, Cowen analyst Thomas Boyes maintained an Outperform rating on PureCycle Technologies, Inc. (NASDAQ:PCT) but lowered the price target on the shares to $11 from $15. The analyst said as expected, pellet production at Ironton shifted into January and said the facility is still forecasted to fully ramp at the end of 2023.
According to Insider Monkey’s third quarter database, 23 hedge funds were bullish on PureCycle Technologies, Inc. (NASDAQ:PCT), with collective stakes worth $407.7 million, compared to 23 funds in the prior quarter worth $400.6 million. Daniel Patrick Gibson’s Sylebra Capital Management is the leading stakeholder of the company, with more than 29 million shares worth $235.5 million.
6. Casella Waste Systems, Inc. (NASDAQ:CWST)
Number of Hedge Fund Holders: 23
Casella Waste Systems, Inc. (NASDAQ:CWST) operates as a vertically integrated solid waste services company in the United States. The company offers resource management services including solid waste collection and disposal, transfer, recycling, and organics services to residential, commercial, municipal, institutional, and industrial customers. The company lifted its full-year 2022 revenue guidance to between $1.065 billion and $1.080 billion from a prior range of $1.035 billion to $1.050 billion. The consensus revenue came in at $1.04 billion.
On October 24, Jefferies analyst Stephanie Moore initiated coverage of Casella Waste Systems, Inc. (NASDAQ:CWST) with a Buy rating and a price target of $95, down from $103. The company offers superior pricing power given its Northeast concentration, as well as the ability to see accelerated margins from operating leverage and efficiency investments, the analyst told investors in a research note. She added that Casella Waste Systems, Inc. (NASDAQ:CWST) is also the only public waste company its size not to be acquired, which provides "downside support to valuation on a takeout potential".
According to Insider Monkey’s data, 23 hedge funds were long Casella Waste Systems, Inc. (NASDAQ:CWST) at the end of the third quarter of 2022, compared to 17 funds in the prior quarter. Jim Simons’ Renaissance Technologies is the largest position holder in the company, with 686,959 shares worth $52.5 million.
In addition to Waste Connections, Inc. (NYSE:WCN), Waste Management, Inc. (NYSE:WM), and Republic Services, Inc. (NYSE:RSG), Casella Waste Systems, Inc. (NASDAQ:CWST) is one of the leading recycling stocks to monitor.
5. GFL Environmental Inc. (NYSE:GFL)
Number of Hedge Fund Holders: 28
GFL Environmental Inc. (NYSE:GFL) is a diversified environmental services company operating in Canada and the United States. The company offers non-hazardous solid waste management, infrastructure and soil remediation, and liquid waste management services. Its solid waste management business includes the collection, transportation, transfer, recycling, and disposal of non-hazardous solid waste for municipal, residential, and commercial and industrial customers.
On November 2, GFL Environmental Inc. (NYSE:GFL) reported a Q3 non-GAAP EPS of $0.20 and a revenue of $1.83 billion, topping market estimates by $0.04 and $570 million, respectively. It is one of the premier recycling stocks to invest in.
CIBC analyst Kevin Chiang on December 14 raised the firm’s price target on GFL Environmental Inc. (NYSE:GFL) to C$50 from C$46 and maintained an Outperform rating on the shares.
According to Insider Monkey’s data, 28 hedge funds were long GFL Environmental Inc. (NYSE:GFL) at the end of Q3 2022, compared to 25 funds in the last quarter. Robert Pohly’s Samlyn Capital is the largest stakeholder of the company, with 4.5 million shares worth $114.3 million.
Here is what Ave Maria specifically said about GFL Environmental Inc. (NYSE:GFL) in its Q2 2022 investor letter:
“GFL Environmental Inc. (NYSE:GFL) is a growing solid waste management company. In the first quarter of 2022, revenue increased 11.3% on an organic basis and 27.4% including acquisitions. At the company’s investor day in May, the management provided increased free-cash-flow guidance for 2022, 2023 and 2024., which looks very positive.”
4. Clean Harbors, Inc. (NYSE:CLH)
Number of Hedge Fund Holders: 30
Clean Harbors, Inc. (NYSE:CLH) is a Massachusetts-based company that provides environmental and industrial services in North America. The company operates through two segments, Environmental Services and Safety-Kleen Sustainability Solutions. The Safety-Kleen Sustainability Solutions segment offers pickup and transportation services for hazardous and non-hazardous containerized waste for recycling or disposal. Clean Harbors, Inc. (NYSE:CLH) is one of the leading recycling stocks to invest in.
Baird analyst David Manthey on November 3 raised the price target on Clean Harbors, Inc. (NYSE:CLH) to $155 from $150 and maintained an Outperform rating on the shares. The analyst sees a good setup for ongoing solid pricing and deferred waste streams, perhaps cushioning results, while PFAS/reshoring/increased blended oil sales could also augment his view.
According to Insider Monkey’s data, 30 hedge funds were long Clean Harbors, Inc. (NYSE:CLH) at the end of September 2022, with combined stakes worth $497 million, compared to 28 funds in the prior quarter worth $408 million. Ian Simm’s Impax Asset Management is the largest position holder in the company, with 1.12 million shares valued at $123 million.
Meridian Funds made the following comment about Clean Harbors, Inc. (NYSE:CLH) in its Q3 2022 investor letter:
“Clean Harbors, Inc. (NYSE:CLH) is a leading hazardous waste treatment, storage, and disposal management company in North America and one of our longer-term holdings. Particularly impressive are its hazardous waste incinerators, which are nearly impossible to replicate. We also like its oil re-refinery business which is gaining recognition as a sustainable source of motor oil. Through cost controls and price increases, the company was successful in managing the inflationary environment during the period. Utilization of its incinerator network reached 90% during its most recently reported quarter and pricing increased 18% from a year ago. High and increasing base oil prices provided an additional boost to its re-refinery business, widening the spread between the price Clean Harbors charges for its refined oil and the price it pays for used oil. A resurgence in U.S. manufacturing activity and the accretive acquisition of HydroChemPSC also contributed to investors’ enthusiasm for the stock. Although our long-term outlook for Clean Harbors remains upbeat, we trimmed our position in the stock due to the company’s high debt balance as a result of the acquisition. We also believe the economic slowdown may eventually impact Clean Harbors, which operates in a late-cycle industry and therefore tends to have a delayed response to economic developments.”
3. LKQ Corporation (NASDAQ:LKQ)
Number of Hedge Fund Holders: 32
LKQ Corporation (NASDAQ:LKQ) was incorporated in 1998 and is headquartered in Chicago, Illinois. The company deals in auto replacement parts, components, and systems used in the repair and maintenance of vehicles. LKQ Corporation (NASDAQ:LKQ) provides scrap metal and other materials to metals and automotive recyclers. The company raised its latest quarterly dividend by 10% to $0.275 per share, which was paid to shareholders on December 1. The board also authorized a $1 billion increase and one-year extension to its stock repurchase program, lifting the aggregate repurchase authorization to $3.5 billion through October 25, 2025.
On July 12, MKM Partners analyst Scott Stember initiated coverage of LKQ Corporation (NASDAQ:LKQ) with a Buy rating and a $68 price target. Prospects for LKQ Corporation (NASDAQ:LKQ)’s North American business “have never been better” and the effective scaling of the European business has yielded gains in segment sales and profits, said the analyst, who added that “LKQ has turned into a cash flow-generating machine.”
According to Insider Monkey’s data, 32 hedge funds were long LKQ Corporation (NASDAQ:LKQ) at the end of September 2022, compared to 31 funds in the earlier quarter. ValueAct Capital is the leading stakeholder of the company, with 12.5 million shares worth $592 million.
Bonsai Partners mentioned LKQ Corporation (NASDAQ: LKQ) in its first-quarter 2021 investor letter. Here’s what they said:
“LKQ is the largest provider of alternative collision and mechanical automotive parts in the United States. In Europe, they are the leading distributor of general automotive maintenance parts and supplies. Its shares appreciated 20.1% during the quarter.
During the quarter, LKQ shared its fourth-quarter results: showing a slight revenue decline and a nearly 30% increase in quarterly profit Vs. the same period last year. COVID has proved a surprising catalyst for my investment thesis which revolves around optimizing their recent large acquisitions that were never efficiently integrated.
Admittedly, in addition to LKQ’s quarterly performance, thematically, there has been broad enthusiasm for “re-opening” trades, of which, LKQ has been a beneficiary. Most importantly, the prior overhang related to LKQ’s debt burden is now all but behind us. Their net debt to EBITDA ratio now sits below 2x, a stark change from the near 3x leverage ratio before the pandemic. At that time, LKQ’s leverage had the potential to spiral upward to nearly 4-5x if the business experienced a prolonged shutdown. It’s good to be past this issue.”
2. Waste Connections, Inc. (NYSE:WCN)
Number of Hedge Fund Holders: 33
Waste Connections, Inc. (NYSE:WCN) is a provider of non-hazardous waste collection, transfer, disposal, and resource recovery services in the United States and Canada. The company offers collection, landfill disposal, and recycling services to residential, commercial, municipal, industrial, and exploration and production customers. It is one of the top recycling stocks to monitor. Waste Connections, Inc. (NYSE:WCN) raised its latest quarterly dividend by nearly 11% to $0.255 per share, which was distributed to shareholders on December 1.
On October 24, Jefferies analyst Stephanie Moore initiated coverage of Waste Connections, Inc. (NYSE:WCN) with a Buy rating and a $165 price target. The analyst said the stock is best-in-class amongst its waste peers with above-average pricing growth and margins due to its suburban market exposure, as well as the exclusivity from its franchise contracts. The analyst added that she views it has a clear line of sight into at least low double digit revenue growth in 2023.
According to Insider Monkey’s Q3 data, 33 hedge funds were long Waste Connections, Inc. (NYSE:WCN), compared to 34 funds in the prior quarter. Bill & Melinda Gates Foundation Trust is the biggest stakeholder of the company, with 2.15 million shares worth $290.4 million.
Conestoga Capital Advisors made the following comment about Waste Connections, Inc. (NYSE:WCN) in its Q3 2022 investor letter:
“Waste Connections, Inc. (NYSE:WCN): WCN is a leading waste management service company that provides collection, recycling, transfer and disposal services in North America. This top ten holding performed well during the quarter given the consistency of its business model with stable volumes, strong pricing power and healthy margins.”
1. Republic Services, Inc. (NYSE:RSG)
Number of Hedge Fund Holders: 41
Republic Services, Inc. (NYSE:RSG) is an Arizona-based company that offers environmental services in the United States. The company provides collection and processing of recyclable materials, collection, transfer and disposal of non-hazardous solid waste, and other environmental solutions. It is one of the best recycling stocks to invest in. On October 27, Republic Services, Inc. (NYSE:RSG) reported a Q3 non-GAAP EPS of $1.34 and a revenue of $3.59 billion, outperforming Wall Street estimates by $0.12 and $60 million, respectively.
BMO Capital analyst Devin Dodge on December 7 downgraded Republic Services, Inc. (NYSE:RSG) to Market Perform from Outperform with a price target of $148, down from $152. Republic Services, Inc. (NYSE:RSG) has meaningfully outperformed the market this year, indicating robust industry conditions, strong execution, and an investor preference for defensive stocks, the analyst told investors in a research note. While solid waste stocks normally outperform deep into a recession, the much anticipated economic pullback has meaningfully been reflected in the relative share price performance, noted the analyst. As such, he sees lower potential returns over the next 12 months. Despite the downgrade, he still believes Republic Services, Inc. (NYSE:RSG) could be attractive for individuals with a longer investment horizon.
According to Insider Monkey’s data, 41 hedge funds were long Republic Services, Inc. (NYSE:RSG) at the end of Q3 2022, compared to 33 funds in the last quarter. Richard Chilton’s Chilton Investment Company is a notable position holder in the company, with 1.38 million shares worth $188.5 million.
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Insider Monkey
by Hamna Asim
December 21, 2022
https://finance.yahoo.com/news/11-best-recycling-stocks-buy-165844433.html
In this article, we discuss 11 best recycling stocks to buy now. If you want to see more stocks in this selection, check out 5 Best Recycling Stocks To Buy Now.
The global waste recycling services market was valued at $57.69 billion in 2021 and is expected to be worth $88.01 billion by 2030, indicating a compound annual growth rate of 4.8% during the forecast period of 2022 to 2030. The high volume of global economic activities has heightened the demand for recycling of waste materials.
The recycling sector has become an integral part of the urban infrastructure since it ensures the protection of both the human health and environment. In addition to higher urbanization and the expanding industrial sector, the growing agricultural production leads to more wastage from the agro-industries, thus driving the demand for the waste recycling services across the globe.
There are new entrants looking to resolve the lags in the waste management and recycling industry. For example, solar panels are considered green hardware, but older versions of panels are turning into hazardous waste. Thus, a California-based startup, SolarCycle, is using that waste by recycling parts of the older panels and disposing them off for profit. SolarCycle asserts that it can cheaply extract about 95% of the important materials in solar panels, like silver, silicon, copper, and aluminum. These can then be recycled or repurposed, resulting in an efficient circular solar economy.
Some of the best recycling stocks to invest in include Waste Connections, Inc. (NYSE:WCN), Waste Management, Inc. (NYSE:WM), and Republic Services, Inc. (NYSE:RSG).
Our Methodology
We selected the following recycling stocks based on positive analyst coverage, strong business fundamentals, and market visibility. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. The list is arranged according to the number of hedge fund holders in each firm.
Best Recycling Stocks To Buy Now
11. Montrose Environmental Group, Inc. (NYSE:MEG)
Number of Hedge Fund Holders: 8
Montrose Environmental Group, Inc. (NYSE:MEG) was founded in 2012 and is headquartered in North Little Rock, Arkansas. It is an environmental services company in the United States, operating through three segments – Assessment, Permitting and Response, Measurement and Analysis, and Remediation and Reuse. It provides its services to the technology, media, chemical, energy, power and utility, industrial and manufacturing, financial, and engineering industries, as well as local, state, provincial, and federal government entities.
On December 12, BofA analyst Andrew Obin upgraded Montrose Environmental Group, Inc. (NYSE:MEG) to Buy from Neutral, citing a forecast for accelerating earnings growth in 2023. Montrose Environmental Group (NYSE:MEG) stock also rose on December 12 after the company announced it had acquired Huco Consulting, a company focused on safety and ESG goals, to expand its range of environmental services.
According to Insider Monkey’s data, 8 hedge funds were bullish on Montrose Environmental Group, Inc. (NYSE:MEG) at the end of the third quarter of 2022, compared to 9 funds in the last quarter. Richard Driehaus’ Driehaus Capital is the largest stakeholder of the company, with 342,461 shares worth $11.5 million.
Like Waste Connections, Inc. (NYSE:WCN), Waste Management, Inc. (NYSE:WM), and Republic Services, Inc. (NYSE:RSG), Montrose Environmental Group, Inc. (NYSE:MEG) is one of the best recycling stocks to consider buying.
Here is what Baron Funds specifically said about Montrose Environmental Group, Inc. (NYSE:MEG) in its Q2 2022 investor letter:
“Montrose Environmental Group, Inc.(NYSE:MEG), an environmental services company, underperformed during the quarter. Despite reiterating guidance for 2022, Montrose underperformed as the market penalized high-growth companies generally. We continue to remain positive on the company’s prospects and ability to achieve or beat its long-term growth target of over 20% per year. We remain particularly excited about Montrose’s potential to benefit from increased government regulation around PFAS chemical contamination and methane emissions.”
10. Quest Resource Holding Corporation (NASDAQ:QRHC)
Number of Hedge Fund Holders: 9
Quest Resource Holding Corporation (NASDAQ:QRHC) is a Texas-based company that provides solutions for the reuse, recycling, and disposal of waste streams and recyclables in the United States. It offers disposal and recycling services for motor oil and automotive lubricants, oil filters, scrap tires, goods destruction, food waste, plastics, cardboard, metal, glass, mixed paper, construction debris, and regulated and non-regulated solid, liquid, and gas wastes. Even without gaining new clients, existing customers will likely expand operations and require more waste services, making Quest Resource Holding Corporation (NASDAQ:QRHC) one of the premier recycling stocks to invest in.
On April 18, EF Hutton analyst Chip Moore initiated coverage of Quest Resource Holding Corporation (NASDAQ:QRHC) with a Buy rating and a $13 price target. As a leading national provider of waste and recycling solutions, Quest Resource Holding Corporation (NASDAQ:QRHC) is "differentiated" by its asset-light, national footprint, and ability to handle comprehensive waste streams, the analyst told investors. He noted that the company has also developed "valuable" data warehousing capabilities, offering full waste-stream services for its clients.
According to Insider Monkey’s data, 9 hedge funds were long Quest Resource Holding Corporation (NASDAQ:QRHC) at the end of September 2022, with collective stakes worth $29.5 million, compared to 7 funds in the prior quarter worth $14.7 million. Nelson Obus’ Wynnefield Capital is the leading position holder in the company, with 2.5 million shares worth $21.7 million.
Here is what Long Cast Advisor specifically said about Quest Resource Holding Corporation (NASDAQ:QRHC) in its Q2 2022 investor letter:
“Quest Resource Holding Corporation (NASDAQ:QRHC) borrowed heavily to purchase Rome RWS, Inc., and with results from the acquired company not yet fully on the income statement, the debt ratios expanded and equity valuations declined. Management – and really the Board – is undertaking a high skill maneuver of integrating its largest acquisition to date, carrying an unprecedented level of debt all concurrent with the long planned retirement of the long tenured CFO. It’s a little more exciting than necessary but the valuation is undemanding and the opportunity set is quite large.
Since I’ve long written about what this company could look like if it leaned more deeply into utilizing technology within its two-sided marketplace, I’ll be closely following the XPO Logistics (XPO) spinoff of the truck brokerage business, expected in 4Q22. Truck and waste brokerage share some similar dynamics and as I’ve long noted, the technologist at XPO worked at Oakleaf concurrently with QRHC CEO Ray Hatch. Technology was a big enabling factor at Oakleaf and in XPO’s +10x growth. I think it would have a similar function for QRHC were management to wisely invest time and resources in its development.”
9. Li-Cycle Holdings Corp. (NYSE:LICY)
Number of Hedge Fund Holders: 15
Li-Cycle Holdings Corp. (NYSE:LICY) is headquartered in Toronto, Ontario, and the company engages in the lithium-ion battery resource recovery and lithium-ion battery recycling business in North America. On October 13, the company announced that it has initiated commercial operations at its lithium-ion battery recycling facility in Alabama. The facility, which is based in Tuscaloosa, uses patented technology to recycle and directly process full EV battery packs without any dismantling through a submerged shredding process that produces no wastewater. Li-Cycle Holdings Corp. (NYSE:LICY) is one of the premier recycling stocks to invest in.
On December 15, ??Citi analyst P.J. Juvekar maintained a Buy recommendation on Li-Cycle Holdings Corp. (NYSE:LICY) but lowered the firm's price target on the shares to $7.50 from $8. The analyst observed that while there is an inclination to go back to cyclical chemical names after having lagged in 2022, he has decided to "stay defensive" going into 2023.
According to Insider Monkey’s data, 15 hedge funds were long Li-Cycle Holdings Corp. (NYSE:LICY) at the end of September 2022, and Zilvinas Mecelis’ Covalis Capital is the leading position holder in the company, with 11.6 million shares worth $61.8 million.
8. Heritage-Crystal Clean, Inc (NASDAQ:HCCI)
Number of Hedge Fund Holders: 19
Heritage-Crystal Clean, Inc (NASDAQ:HCCI) is an Illinois-based company that provides parts cleaning, hazardous and non-hazardous waste, and used oil collection services to small and mid-sized customers in the industrial and vehicle maintenance sectors in the United States and Canada. The company also provides containerized waste management, wastewater vacuum, antifreeze recycling, and field services. Heritage-Crystal Clean, Inc (NASDAQ:HCCI) is one of the leading recycling stocks to invest in.
On October 19, Heritage-Crystal Clean, Inc (NASDAQ:HCCI) reported Q3 non-GAAP earnings per share of $1.01 and a revenue of $172.22 million, outperforming Wall Street estimates by $0.21 and $17.23 million, respectively. The Q3 revenue increased nearly 40% compared to the prior-year quarter.
Needham analyst James Ricchiuti on October 21 maintained a Buy rating on Heritage-Crystal Clean, Inc (NASDAQ:HCCI) but trimmed the firm's price target on the shares to $40 from $43 as he noted that the company delivered "another impressive quarterly report." Oil business margins are forecasted to shrink in Q4 as a result of downtime in Heritage-Crystal Clean, Inc (NASDAQ:HCCI)’s refinery, which may have contributed to the pullback in shares, but it is "unwarranted," the analyst wrote in a research note.
According to Insider Monkey’s data, 19 hedge funds were long Heritage-Crystal Clean, Inc (NASDAQ:HCCI) at the end of September 2022, compared to 16 funds in the last quarter. Chuck Royce’s Royce & Associates is the largest stakeholder of the company, with 1.15 million shares worth $34 million.
Meridian Funds made the following comment about Heritage-Crystal Clean, Inc (NASDAQ:HCCI) in its Q3 2022 investor letter:
“Heritage-Crystal Clean, Inc (NASDAQ:HCCI) is an environmental services company focused on machine parts cleaning, used oil collection, oil re-refining, and hazardous and non-hazardous waste services. Our rationale for investing in this company includes the recurring revenue stream it generates from its environmental services business unit and substantial growth opportunities in the re-refinery and used oil collection segments. Continued strong execution and higher oil prices contributed to the stock’s solid performance during the period. Notably, Heritage-Crystal Clean’s oil business segment generated record revenue in the second quarter and saw segment margins improve to 41%, as the spread between base oil sales and the cost of collecting used oil widened. The company’s core environmental services segment also recorded record quarterly revenue. We believe the environmental, social, and governance (ESG) story at Heritage remains under appreciated by the market as the company collects used motor oil and recycles it for reuse. We have high conviction in the long-term growth story for the company, but trimmed our position in the stock during the period as the share price appreciated.”
7. PureCycle Technologies, Inc. (NASDAQ:PCT)
Number of Hedge Fund Holders: 23
PureCycle Technologies, Inc. (NASDAQ:PCT) was founded in 2015 and is headquartered in Orlando, Florida. The company produces recycled polypropylene (PP) and holds a license for restoring waste PP into ultra-pure recycled resin. Its recycling process separates color, odor, and other contaminants from plastic waste feedstock to turn it into virgin-like resin. PureCycle Technologies, Inc. (NASDAQ:PCT) is one of the best recycling stocks to consider. At the end of September 30, the company had total liquidity of $416.1 million, including $215.0 million of cash, cash equivalents, and debt securities available for sale and $201.1 million in restricted cash.
On November 11, Cowen analyst Thomas Boyes maintained an Outperform rating on PureCycle Technologies, Inc. (NASDAQ:PCT) but lowered the price target on the shares to $11 from $15. The analyst said as expected, pellet production at Ironton shifted into January and said the facility is still forecasted to fully ramp at the end of 2023.
According to Insider Monkey’s third quarter database, 23 hedge funds were bullish on PureCycle Technologies, Inc. (NASDAQ:PCT), with collective stakes worth $407.7 million, compared to 23 funds in the prior quarter worth $400.6 million. Daniel Patrick Gibson’s Sylebra Capital Management is the leading stakeholder of the company, with more than 29 million shares worth $235.5 million.
6. Casella Waste Systems, Inc. (NASDAQ:CWST)
Number of Hedge Fund Holders: 23
Casella Waste Systems, Inc. (NASDAQ:CWST) operates as a vertically integrated solid waste services company in the United States. The company offers resource management services including solid waste collection and disposal, transfer, recycling, and organics services to residential, commercial, municipal, institutional, and industrial customers. The company lifted its full-year 2022 revenue guidance to between $1.065 billion and $1.080 billion from a prior range of $1.035 billion to $1.050 billion. The consensus revenue came in at $1.04 billion.
On October 24, Jefferies analyst Stephanie Moore initiated coverage of Casella Waste Systems, Inc. (NASDAQ:CWST) with a Buy rating and a price target of $95, down from $103. The company offers superior pricing power given its Northeast concentration, as well as the ability to see accelerated margins from operating leverage and efficiency investments, the analyst told investors in a research note. She added that Casella Waste Systems, Inc. (NASDAQ:CWST) is also the only public waste company its size not to be acquired, which provides "downside support to valuation on a takeout potential".
According to Insider Monkey’s data, 23 hedge funds were long Casella Waste Systems, Inc. (NASDAQ:CWST) at the end of the third quarter of 2022, compared to 17 funds in the prior quarter. Jim Simons’ Renaissance Technologies is the largest position holder in the company, with 686,959 shares worth $52.5 million.
In addition to Waste Connections, Inc. (NYSE:WCN), Waste Management, Inc. (NYSE:WM), and Republic Services, Inc. (NYSE:RSG), Casella Waste Systems, Inc. (NASDAQ:CWST) is one of the leading recycling stocks to monitor.
5. GFL Environmental Inc. (NYSE:GFL)
Number of Hedge Fund Holders: 28
GFL Environmental Inc. (NYSE:GFL) is a diversified environmental services company operating in Canada and the United States. The company offers non-hazardous solid waste management, infrastructure and soil remediation, and liquid waste management services. Its solid waste management business includes the collection, transportation, transfer, recycling, and disposal of non-hazardous solid waste for municipal, residential, and commercial and industrial customers.
On November 2, GFL Environmental Inc. (NYSE:GFL) reported a Q3 non-GAAP EPS of $0.20 and a revenue of $1.83 billion, topping market estimates by $0.04 and $570 million, respectively. It is one of the premier recycling stocks to invest in.
CIBC analyst Kevin Chiang on December 14 raised the firm’s price target on GFL Environmental Inc. (NYSE:GFL) to C$50 from C$46 and maintained an Outperform rating on the shares.
According to Insider Monkey’s data, 28 hedge funds were long GFL Environmental Inc. (NYSE:GFL) at the end of Q3 2022, compared to 25 funds in the last quarter. Robert Pohly’s Samlyn Capital is the largest stakeholder of the company, with 4.5 million shares worth $114.3 million.
Here is what Ave Maria specifically said about GFL Environmental Inc. (NYSE:GFL) in its Q2 2022 investor letter:
“GFL Environmental Inc. (NYSE:GFL) is a growing solid waste management company. In the first quarter of 2022, revenue increased 11.3% on an organic basis and 27.4% including acquisitions. At the company’s investor day in May, the management provided increased free-cash-flow guidance for 2022, 2023 and 2024., which looks very positive.”
4. Clean Harbors, Inc. (NYSE:CLH)
Number of Hedge Fund Holders: 30
Clean Harbors, Inc. (NYSE:CLH) is a Massachusetts-based company that provides environmental and industrial services in North America. The company operates through two segments, Environmental Services and Safety-Kleen Sustainability Solutions. The Safety-Kleen Sustainability Solutions segment offers pickup and transportation services for hazardous and non-hazardous containerized waste for recycling or disposal. Clean Harbors, Inc. (NYSE:CLH) is one of the leading recycling stocks to invest in.
Baird analyst David Manthey on November 3 raised the price target on Clean Harbors, Inc. (NYSE:CLH) to $155 from $150 and maintained an Outperform rating on the shares. The analyst sees a good setup for ongoing solid pricing and deferred waste streams, perhaps cushioning results, while PFAS/reshoring/increased blended oil sales could also augment his view.
According to Insider Monkey’s data, 30 hedge funds were long Clean Harbors, Inc. (NYSE:CLH) at the end of September 2022, with combined stakes worth $497 million, compared to 28 funds in the prior quarter worth $408 million. Ian Simm’s Impax Asset Management is the largest position holder in the company, with 1.12 million shares valued at $123 million.
Meridian Funds made the following comment about Clean Harbors, Inc. (NYSE:CLH) in its Q3 2022 investor letter:
“Clean Harbors, Inc. (NYSE:CLH) is a leading hazardous waste treatment, storage, and disposal management company in North America and one of our longer-term holdings. Particularly impressive are its hazardous waste incinerators, which are nearly impossible to replicate. We also like its oil re-refinery business which is gaining recognition as a sustainable source of motor oil. Through cost controls and price increases, the company was successful in managing the inflationary environment during the period. Utilization of its incinerator network reached 90% during its most recently reported quarter and pricing increased 18% from a year ago. High and increasing base oil prices provided an additional boost to its re-refinery business, widening the spread between the price Clean Harbors charges for its refined oil and the price it pays for used oil. A resurgence in U.S. manufacturing activity and the accretive acquisition of HydroChemPSC also contributed to investors’ enthusiasm for the stock. Although our long-term outlook for Clean Harbors remains upbeat, we trimmed our position in the stock due to the company’s high debt balance as a result of the acquisition. We also believe the economic slowdown may eventually impact Clean Harbors, which operates in a late-cycle industry and therefore tends to have a delayed response to economic developments.”
3. LKQ Corporation (NASDAQ:LKQ)
Number of Hedge Fund Holders: 32
LKQ Corporation (NASDAQ:LKQ) was incorporated in 1998 and is headquartered in Chicago, Illinois. The company deals in auto replacement parts, components, and systems used in the repair and maintenance of vehicles. LKQ Corporation (NASDAQ:LKQ) provides scrap metal and other materials to metals and automotive recyclers. The company raised its latest quarterly dividend by 10% to $0.275 per share, which was paid to shareholders on December 1. The board also authorized a $1 billion increase and one-year extension to its stock repurchase program, lifting the aggregate repurchase authorization to $3.5 billion through October 25, 2025.
On July 12, MKM Partners analyst Scott Stember initiated coverage of LKQ Corporation (NASDAQ:LKQ) with a Buy rating and a $68 price target. Prospects for LKQ Corporation (NASDAQ:LKQ)’s North American business “have never been better” and the effective scaling of the European business has yielded gains in segment sales and profits, said the analyst, who added that “LKQ has turned into a cash flow-generating machine.”
According to Insider Monkey’s data, 32 hedge funds were long LKQ Corporation (NASDAQ:LKQ) at the end of September 2022, compared to 31 funds in the earlier quarter. ValueAct Capital is the leading stakeholder of the company, with 12.5 million shares worth $592 million.
Bonsai Partners mentioned LKQ Corporation (NASDAQ: LKQ) in its first-quarter 2021 investor letter. Here’s what they said:
“LKQ is the largest provider of alternative collision and mechanical automotive parts in the United States. In Europe, they are the leading distributor of general automotive maintenance parts and supplies. Its shares appreciated 20.1% during the quarter.
During the quarter, LKQ shared its fourth-quarter results: showing a slight revenue decline and a nearly 30% increase in quarterly profit Vs. the same period last year. COVID has proved a surprising catalyst for my investment thesis which revolves around optimizing their recent large acquisitions that were never efficiently integrated.
Admittedly, in addition to LKQ’s quarterly performance, thematically, there has been broad enthusiasm for “re-opening” trades, of which, LKQ has been a beneficiary. Most importantly, the prior overhang related to LKQ’s debt burden is now all but behind us. Their net debt to EBITDA ratio now sits below 2x, a stark change from the near 3x leverage ratio before the pandemic. At that time, LKQ’s leverage had the potential to spiral upward to nearly 4-5x if the business experienced a prolonged shutdown. It’s good to be past this issue.”
2. Waste Connections, Inc. (NYSE:WCN)
Number of Hedge Fund Holders: 33
Waste Connections, Inc. (NYSE:WCN) is a provider of non-hazardous waste collection, transfer, disposal, and resource recovery services in the United States and Canada. The company offers collection, landfill disposal, and recycling services to residential, commercial, municipal, industrial, and exploration and production customers. It is one of the top recycling stocks to monitor. Waste Connections, Inc. (NYSE:WCN) raised its latest quarterly dividend by nearly 11% to $0.255 per share, which was distributed to shareholders on December 1.
On October 24, Jefferies analyst Stephanie Moore initiated coverage of Waste Connections, Inc. (NYSE:WCN) with a Buy rating and a $165 price target. The analyst said the stock is best-in-class amongst its waste peers with above-average pricing growth and margins due to its suburban market exposure, as well as the exclusivity from its franchise contracts. The analyst added that she views it has a clear line of sight into at least low double digit revenue growth in 2023.
According to Insider Monkey’s Q3 data, 33 hedge funds were long Waste Connections, Inc. (NYSE:WCN), compared to 34 funds in the prior quarter. Bill & Melinda Gates Foundation Trust is the biggest stakeholder of the company, with 2.15 million shares worth $290.4 million.
Conestoga Capital Advisors made the following comment about Waste Connections, Inc. (NYSE:WCN) in its Q3 2022 investor letter:
“Waste Connections, Inc. (NYSE:WCN): WCN is a leading waste management service company that provides collection, recycling, transfer and disposal services in North America. This top ten holding performed well during the quarter given the consistency of its business model with stable volumes, strong pricing power and healthy margins.”
1. Republic Services, Inc. (NYSE:RSG)
Number of Hedge Fund Holders: 41
Republic Services, Inc. (NYSE:RSG) is an Arizona-based company that offers environmental services in the United States. The company provides collection and processing of recyclable materials, collection, transfer and disposal of non-hazardous solid waste, and other environmental solutions. It is one of the best recycling stocks to invest in. On October 27, Republic Services, Inc. (NYSE:RSG) reported a Q3 non-GAAP EPS of $1.34 and a revenue of $3.59 billion, outperforming Wall Street estimates by $0.12 and $60 million, respectively.
BMO Capital analyst Devin Dodge on December 7 downgraded Republic Services, Inc. (NYSE:RSG) to Market Perform from Outperform with a price target of $148, down from $152. Republic Services, Inc. (NYSE:RSG) has meaningfully outperformed the market this year, indicating robust industry conditions, strong execution, and an investor preference for defensive stocks, the analyst told investors in a research note. While solid waste stocks normally outperform deep into a recession, the much anticipated economic pullback has meaningfully been reflected in the relative share price performance, noted the analyst. As such, he sees lower potential returns over the next 12 months. Despite the downgrade, he still believes Republic Services, Inc. (NYSE:RSG) could be attractive for individuals with a longer investment horizon.
According to Insider Monkey’s data, 41 hedge funds were long Republic Services, Inc. (NYSE:RSG) at the end of Q3 2022, compared to 33 funds in the last quarter. Richard Chilton’s Chilton Investment Company is a notable position holder in the company, with 1.38 million shares worth $188.5 million.
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