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Stericycle, Inc. Message Board

  • recombinantman recombinantman Oct 15, 2011 8:06 AM Flag

    Negative Article on SRCL

    Compelling negative article on SRCL. One cautionary note is that the author is short the stock. See:

    I am short this stock (via options) also.

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    • Thanks for posting the article, and I agree w/ his assessment that SRCL is getting extended here (some insiders agree, as evidenced by some recent insider selling). I like their story, and am long the stock but caution is warranted. The analyst likened their 'roll-up' model to Waste Mgt, but I could not help but recall Tyco (TYC) falling off a cliff under Kozlowski in 2001, and a similar story with Metals Management--their model was to aggregate metal recyclers and eventually went BK. Service businesses don't lend themselves to consolidation efficiencies as do manufacturers, and as the article points out, you often have integration issues. To SRCL management's credit they've done it far. I've listened to a couple conference calls and they exude confidence and a good story, but agree there is reason to doubt future growth and yes, there are balance sheet questions.

      Recent price trend (down since May'11 high) is saying something---if it were truly disconnected from secular market trend, it shd be showing better relative strength.

      Bottom line.....I will buy insurance (via puts) going into next earnings release.

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