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 has performed well so far this year and has the potential to sustain the momentum in the near term as well. Consequently, if you have not 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 gained 42% in the said period, outperforming the 27.6% rally of the industry it belongs to.
Solid Rank & VGM Score: The waste removal services stock currently has a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities. 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. The Zacks Consensus Estimate for 2019 earnings has increased 7.7% over the past 90 days. Earnings estimates for 2020 have moved up 5.8%, over the same time period.
Positive Earnings Surprise History: Clean Harbors has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in all the preceding four quarters, delivering an average surprise of more than 100%.
Strong Growth Prospects: The Zacks Consensus Estimate for second-quarter 2019 earnings is pegged at 62 cents, indicating year-over-year growth of 14.8%. Moreover, earnings in 2019 and 2020 are expected to register 44.4% and 20.8% growth, respectively, from the year-ago reported figures.
Growth Factors: Clean Harbors continues to benefit from acquisitions. In 2018, the company had completed two acquisitions — a privately-owned company in August and the U.S. Industrial Cleaning Business of Veolia Environmental Services North America LLC (the "Veolia Business") in February. While the privately-owned company expanded Clean Harbors’ environmental services and waste oil capabilities, Veolia boosted the company’s U.S. Industrial Services business. Additionally, the company had generated $154 million of direct revenues from the Veolia Business in 2018.
In 2017, Clean Harbors had completed four acquisitions that contributed to revenues of almost $14.5 million. Additionally, the buyouts helped the company in multiple lines of services such as waste minimization, remodeling of its fleet of trucks, and growth in daylighting and hydro excavation services markets. These acquisitions also complemented its closed loop model in relation to the sale of oil products.
The company's focus on improving efficiency and lowering operating costs through enhanced technology, process efficiencies and stringent cost management is appreciable. It continues to make capital investments to enhance its quality, and comply with government and local regulations.
Clean Harbors has a diversified customer base ranging from Fortune 500 companies to mid-size and small public and private entities, which provide it with stable as well as recurring sources of revenues. The company has been chosen as an authorized vendor by large and small generators of waste, as it has comprehensive waste disposal and waste tracking capabilities.
Other Stocks to Consider
Other top-ranked stocks in the broader Zacks Business Services sector include Broadridge BR, ICF International ICFI and Accenture ACN, each carrying a Zacks Rank #2. Long-term (three to five years) expected EPS growth rate for Broadridge, ICF International and Accenture is 10%, 10% and 10.3%, respectively.
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