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 bull run.
Republic Services, Inc. RSG is a waste removal services stock that has performed well so far this year and has the potential to sustain the momentum in the near term.
What Makes it an Attractive Pick?
An Outperformer: Shares of Republic Services have gained 4.5% in the past year against 2% decline of the industry it belongs to and 7.8% fall of the Zacks S&P 500 composite.
Solid Rank & VGM Score: Republic Services currently carries a Zacks Rank #2 (Buy) and has 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 for investors. 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 earnings estimate revisions serves as an important pointer when it comes to the price of a stock. The Zacks Consensus Estimate for fourth-quarter earnings has moved up 1.3% over the past 90 days. The same for 2019 has moved up 0.3%.
Positive Earnings Surprise History: Republic Services has an attractive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters. The average beat is 3.9%.
Strong Growth Prospects: The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 78 cents, indicating year-over-year growth of 27.9%. Moreover, earnings are expected to register 6.3% in 2019. The stock has an expected long-term (three to five years) earnings per share growth rate of 10.7%.
Driving Factors: Republic Services continues to grow internally with the help of long-term contracts for the collection, recycling and disposal of solid waste materials. Such agreements increase the company’s contracted revenue base, thereby strengthening its market position.
The company continues to look out for strategic price increase in order to offset increased costs, improve operating margins, as well as enjoy an appropriate return on its substantial investments in vehicles, equipment, landfills, transfer stations and recycling centers. The company’s business stands to benefit from increasing demand for recycling of waste products.
The company is focused on increasing its operational efficiency by shifting to compressed natural gas (CNG) collection vehicles and converting rear-loading trucks to automated-side loaders, which will streamline the cost structure, improve revenue quality and enhance growth through profitable investment opportunities. Almost 19% of the company’s fleet operates on natural gas and nearly 75% of its residential routes have been converted to automated single-driver trucks.
Other Stocks to Consider
Other top-ranked stocks in the broader Zacks Business Services sector include Waste Connections WCN, Navigant Consulting NCI and BG Staffing BGSF, each carrying a Zacks Rank #2. Long-term expected EPS (three to five years) growth rate for Waste Connections, Navigant and BG Staffing is pegged at 11.7%, 13.5% and 20%, respectively.
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Navigant Consulting, Inc. (NCI) : Free Stock Analysis Report
BG Staffing Inc (BGSF) : Free Stock Analysis Report
Republic Services, Inc. (RSG) : Free Stock Analysis Report
Waste Connections, Inc. (WCN) : Free Stock Analysis Report
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