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 54.8% in the said period, outperforming the 24.7% rally of the industry it belongs to.
Solid Rank & VGM Score: The waste removal services stock currently has a Zacks Rank #1 (Strong 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 or 2 (Buy) 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 third-quarter 2019 earnings has increased 4.2% over the past 60 days. Earnings estimates for 2019 and 2020 have moved up 6.6% and 7.3%, respectively, 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, with the average earnings surprise being more than 100%.
Strong Growth Prospects: The Zacks Consensus Estimate for third-quarter 2019 earnings is pegged at 74 cents, indicating growth of 25.4% from the year-ago reported figure. Moreover, earnings in 2019 and 2020 are expected to register 53.9% and 21.9% growth, respectively, from the year-ago reported figures.
Growth Factors: Clean Harbors continues to benefit from acquisitions. In the first half of 2019, Clean Harbors acquired certain assets of a privately-owned business for $10.4 million (to boost its Safety-Kleen segment's core service offerings) and a privately-owned business for $14.9 million (to expand its environmental services and hazardous materials management services).
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. The company generated $154 million of direct revenues from the Veolia Business in 2018.
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
Some other top-ranked stocks in the broader Zacks Business Services sector are Visa V, Huron Consulting HURN and Fiserv FISV, each carrying a Zacks Rank #2. Long-term expected EPS (three to five years) growth rate for Visa, Huron Consulting and Fiserv is 16.5%, 13.5% and 12%, respectively.
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