10 Recycling Stocks to Buy Now

Published on March 30, 2022 at 4:28 pm by Usman Kabir in Hedge Funds, News

In this article, we discuss the 10 recycling stocks to buy now. If you want to read about some more recycling stocks to buy now, go directly to 5 Recycling Stocks to Buy Now.

The recycling industry is fast-emerging as one of the dominant market forces in the environmental sector. According to investment bank Stifel, the five largest recycling firms in the United States and Canada spent over $3.5 billion on mergers and acquisitions alone in 2021, beating the amount spent on consolidation in 2019. Solid waste firms, which comprise a part of the overall recycling industry, completed 95 mergers during the period, according to news platform Waste Dive that tracks recycling firms.

ESG, Government Spending Drive Recycling Forward

This industry consolidation is being fueled by concerns around a rise in the capital gains tax and recent reports that US President Biden might also move towards taxing unrealized gains. As countries around the world pledge to reduce their carbon emissions by 30% by the end of this decade, recycling firms have come under renewed focus on the international stage as well. ESG initiatives, becoming central to the finance world as well, are forcing large corporations to increase the use of reusable packaging in their products to more than 2%.

The US government is also ramping up spending in the recycling business. Under the Biden Jobs and Infrastructure Plan, approved earlier this year, $350 million have been set aside for municipal recycling improvements and upgrades to local waste systems, as well as battery recycling research. The funding is expected to be rolled out to local governments later this year. A Paycheck Protection Program is also expanding as the government increases the national recycling rate target to 50% by 2030.

Electric Vehicles, Tech-Related Waste Raise New Questions

The emergence of electric vehicles and other high-tech industries like quantum computing have led to questions about the environmental impact of consumer electronic goods. Recycling of EV batteries, one of the key components of futuristic vehicles, is already a thriving business. However, the collection and processing infrastructure for recycling, especially in the context of EVs, still has to scale up to meet demand. In addition, it has become harder for cities to innovate around new models as even basic services come harder to get by, indicative of larger political problems in both developed and non-developed economies.

Governments and businesses are nevertheless trying to incorporate new recycling goals to build a circular economy that benefits everyone. Lowering consumption and reducing waste, for the time being, remain the top priorities. Investors who are eager to jump aboard this boom for recycling should invest in established firms that have solid reputations and growth prospects. Some of the top recycling stocks to buy now include Clean Harbors, Inc. (NYSE:CLH), Casella Waste Systems, Inc. (NASDAQ:CWST), and Hercules Capital, Inc. (NYSE:HTGC), among others discussed in detail below.

Our Methodology

The companies that operate in the recycling sector and are best positioned to gain in the coming months based on their business fundamentals and analyst ratings were selected for the list.

Data from around 900 elite hedge funds tracked by Insider Monkey was used to identify the number of hedge funds that hold stakes in each firm.

Photo by Nick Fewings on Unsplash

Recycling Stocks to Buy Now

10. Stericycle, Inc. (NASDAQ:SRCL)

Number of Hedge Fund Holders: 16

Stericycle, Inc. (NASDAQ:SRCL) provides regulated and compliance solutions. The firm primarily serves the healthcare industry in the United States and Europe. On March 23, RBC Capital analyst Sean Dodge kept an Outperform rating on the stock with a price target of $82, naming the stock as the “New Top Idea for 2022” in a bullish investor note that highlighted the “sustained organic revenue growth and margin expansion” for the firm that were offsetting near-term risks.

Stericycle, Inc. (NASDAQ:SRCL) shares have pulled back in the past few months and now seem attractively valued, per market experts like Dodge, given the capital allocation initiatives that the waste management firm has undertaken in relation to debt reduction and business or asset sales.

At the end of the fourth quarter of 2021, 16 hedge funds in the database of Insider Monkey held stakes worth $472 million in Stericycle, Inc. (NASDAQ:SRCL), compared to 17 in the previous quarter worth $516 million.

Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Ariel Investments is a leading shareholder in Stericycle, Inc. (NASDAQ:SRCL) with 4.2 million shares worth more than $253 million.

Just like Clean Harbors, Inc. (NYSE:CLH), Casella Waste Systems, Inc. (NASDAQ:CWST), and Hercules Capital, Inc. (NYSE:HTGC), Stericycle, Inc. (NASDAQ:SRCL) is one of the stocks on the radar of institutional investors.

9. Republic Services, Inc. (NYSE:RSG)

Number of Hedge Fund Holders: 38

Republic Services, Inc. (NYSE:RSG) offers environmental services like the collection and processing of recyclable materials. The company has an impressive dividend history stretching back close to two decades. On February 10, it declared a quarterly dividend of $0.46 per share, in line with previous. The forward yield was 1.46%. The dividend will be payable to shareholders by late March and early April.

On March 1, JPMorgan analyst Stephanie Yee reinstated coverage of Republic Services, Inc. (NYSE:RSG) stock with a Neutral rating and a price target of $135, noting that firms dealing in solid waste were generating strong margins and free cash flows.

At the end of the fourth quarter of 2021, 38 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in Republic Services, Inc. (NYSE:RSG), up from 31 in the preceding quarter worth $1.2 billion.

Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm AQR Capital Management is a leading shareholder in Republic Services, Inc. (NYSE:RSG) with 1.6 million shares worth more than $228 million.

8. Waste Connections, Inc. (NYSE:WCN)

Number of Hedge Fund Holders: 36

Waste Connections, Inc. (NYSE:WCN) provides waste collection and recycling services. On March 1, JPMorgan analyst Stephanie Yee reinstated coverage of the stock with an Overweight rating and a price target of $147, highlighting that the firm had a “sustainable competitive advantage in its solid waste business, with a differentiated market positioning” that was focused on exclusive and secondary markets.

Waste Connections, Inc. (NYSE:WCN) has a solid dividend history as well. It has paid a dividend to shareholders consistently for the past nineteen years and has grown the payout for the last four. It declared a quarterly dividend of $0.23 per share in mid-February.

At the end of the fourth quarter of 2021, 36 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in Waste Connections, Inc. (NYSE:WCN), up from 32 the preceding quarter worth $785 million.

Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Waste Connections, Inc. (NYSE:WCN) with 1.7 million shares worth more than $239 million.

7. Waste Management, Inc. (NYSE:WM)

Number of Hedge Fund Holders: 35

Waste Management, Inc. (NYSE:WM) provides waste management environmental services. In addition to materials processing and commodities recycling, the company also provides services such as the marketing of recyclable materials for third parties. On February 2, the firm posted earnings for the fourth quarter of 2021, beating market estimates on earnings per share and revenue by $0.04 and $60 million respectively.

JPMorgan analyst Stephanie Yee has a Neutral rating on Waste Management, Inc. (NYSE:WM) stock with a price target of $153. In a recent investor note, the analyst said the firm was playing “catch up” amid rising inflationary costs but the outlook for the sector overall remained bright.

At the end of the fourth quarter of 2021, 35 hedge funds in the database of Insider Monkey held stakes worth $4.1 billion in Waste Management, Inc. (NYSE:WM), compared to 36 in the preceding quarter worth $3.6 billion.

Among the hedge funds being tracked by Insider Monkey, Washington-based firm Bill & Melinda Gates Foundation Trust is a leading shareholder in Waste Management, Inc. (NYSE:WM) with 18 million shares worth more than $3 billion.

6. Steel Dynamics, Inc. (NASDAQ:STLD)

Number of Hedge Fund Holders: 29

Steel Dynamics, Inc. (NASDAQ:STLD) is a steel producer and metal recycler. The stock has gained in the past few weeks after steel supplies from Russia were disrupted as a result of the Ukraine war and the Western sanctions against Moscow, fueling a rally in steel prices and a boom for US-based steel producers. The company has also benefited from the recent easing of steel tariffs between the US and UK.

On March 24, JPMorgan analyst Michael Glick kept an Overweight rating on Steel Dynamics, Inc. (NASDAQ:STLD) stock and raised the price target to $117 from $95, noting that there was broad upside for the steel industry in the coming months.

Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Steel Dynamics, Inc. (NASDAQ:STLD) with 1 million shares worth more than $66 million.

At the end of the fourth quarter of 2021, 29 hedge funds in the database of Insider Monkey held stakes worth $390 million in Steel Dynamics, Inc. (NASDAQ:STLD), up from 23 in the previous quarter worth $481 million.

Along with Clean Harbors, Inc. (NYSE:CLH), Casella Waste Systems, Inc. (NASDAQ:CWST), and Hercules Capital, Inc. (NYSE:HTGC), Steel Dynamics, Inc. (NASDAQ:STLD) is one of the stocks that hedge funds are monitoring.

Click to continue reading and see 5 Recycling Stocks to Buy Now.