Recycling isn’t a glamorous investment theme, but it is a critical one. Here is a collection of stocks to watch amid strong demand for waste management and recycling services.
- Waste Connections is to acquire 30 waste management and disposal facilities in Canada.
- Republic Services has opened a polymer centre in Las Vegas where it will recycle bottles into bottles.
- Tetra Tech has been awarded a contract to help the US Environmental Protection Agency clean up the Great Lakes region.
Waste Connections
The Facilities Acquisition Stock
Waste Connections [WCN] announced last week that it had entered into an agreement to acquire 30 waste treatment and disposal facilities in western Canada from Secure Energy Services [SECYF]. The facilities are located in oil and gas basins and serve a large and diverse customer base. “With a heavy orientation towards serving customers engaged in energy production activity, these assets will be complementary to our US R360 Environmental Solutions operations,” said President and CEO Ronald J Mittelstaedt in a press release.
Republic Services
The Bottle-to-Bottle Recycling Stock
Republic Services [RSG] opened a polymer centre in Las Vegas earlier this month, which is expected to turn more than 100 million pounds of plastic from bottles and cartons into sustainable packaging each year. “As a leader in the environmental services industry, it's our responsibility to challenge every truckload of material we collect,” said President and CEO Jon Vander Ark in a press release. The company is planning to establish a network of polymer centres across the US, with the second due to open in Indianapolis in late 2024.
Tetra Tech
The Great Lakes Clean-up Stock
Tetra Tech [TTEK] won a $450m five-year contract from the US Environmental Protection Agency in October to accelerate the clean-up of contaminated areas in the Great Lakes region. The company will carry out site assessments and feasibility studies, collect relevant data, and design solutions. “Our work applying innovative technologies to remediate contaminated sites and restore coastal areas throughout the Great Lakes Basin is part of our commitment to improve one billion lives through our projects by 2030,” said Chairman and CEO Dan Batrack in a press release.
Darling Ingredients
The Responsible Company Stock
Darling Ingredients [DAR] was recently voted the 13th most responsible company in the US consumer goods industry for 2023, in a ranking compiled by Newsweek and Statista. CEO Randall Stuewe commented in a press release that “sustainability is not just a concept, it is the driving force of our business”, to which the company is “unwavering” in its commitment. Darling recycles agricultural food waste into sustainable products and renewable energy.
Waste Management
The Dividend Raise Stock
Waste Management [WM] announced last week that it’s to bump up its dividend by 7.1%, marking the 21st consecutive year it’s been raised. “The strong and consistent cash flow generation of our business allows WM to continue to fund all our capital allocation priorities. In 2023, we will pay over $1bn in cash to our shareholders through dividends,” said President and CEO Jim Fish in a statement. Free cash flow was $612m in the third quarter of 2024, up from $432m in the year-ago quarter.
Another Way to Invest in Recycling
The VanEck Environmental Services ETF
The VanEck Environmental Services ETF [EVX] holds all five stocks. As of 30 November, 76.1% of the portfolio is allocated to industrials and 16.4% to materials; energy has a 1.5% weighting. The fund is up 12.3% year-to-date as of 18 December.
The WisdomTree Recycling Decarbonisation UCITS ETF [WRCY:L] holds Darling Ingredients, Republic Services, Waste Connections and Waste Management. As of 15 December, 48.7% of the portfolio is allocated to industrials, while energy has a 25.2% weighting. Materials and utilities account for 10.7% and 9.4% respectively. The fund is down 17.7% year-to-date.
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