Five Environmental Stocks to Buy Now

While capital appreciation is the main goal for most investors when it comes to investing their money, some investors want their investments to do more than just multiply their money. For those investors, we at Insider Monkey routinely come up with a list of top environmental stocks based on how popular these stocks were among smart money investors from our database at the end of a given quarter. We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here). Having said that, in this post we will focus on the top five environmental stocks among hedge funds tracked by us heading into 2016.

#5 Clean Harbors Inc (NYSE:CLH)

 – Investors with Long Positions (as of December 31): 18

 – Aggregate Value of Investors’ Holdings (as of December 31): $182.4 million

The ownership of Clean Harbors Inc (NYSE:CLH) among hedge funds tracked by Insider Monkey decreased by four and the aggregate value of their holdings saw a decline of 37.7% during the fourth quarter. However, the funds that sold off their stakes in the company last quarter might regret the decision as shares of Clean Harbors Inc (NYSE:CLH) have appreciated by 13.5% so far this year. Nearly all of the year-to-date gains came after the company reported its fourth quarter numbers recently and despite the numbers being below expectations. While analysts were expecting EPS of $0.12 on revenue of $741.30 million, Clean Harbors reported EPS of $0.01 on revenue of $713 million. On March 14, the company announced that was planning to commence an add-on offering of $200 million aggregate principal amount of its 5.125% Senior Notes due 2021. Billionaire Jim Simons‘ Renaissance Technologies made an almost four-fold increase in its stake in Clean Harbors Inc to 572,890 shares during the October-December period.

#4 Waste Connections, Inc. (NYSE:WCN)

– Investors with Long Positions (as of December 31): 19

 – Aggregate Value of Investors’ Holdings (as of December 31): $366 million

Waste Connections, Inc. (NYSE:WCN)’s stock has been on an upward journey for the last six months, appreciating by nearly 35% in that period. During the fourth quarter, when it rose by 16%, the ownership of the company among funds covered by us declined by four. However, the aggregate value of their holdings in it increased by $41.6 million during the same time. On January 19, the company announced that to expand in Canada it has agreed to purchase Progressive Waste Solutions (NYSE:BIN) for $2.67B, following which its stock started rallying and now trades up 16.13% year-to-date. Analysts feel that this merger will create significant value for Waste Connections, Inc. (NYSE:WCN) ‘s shareholder in the long-term. On February 10, analysts at Credit Suisse boosted their price target on the stock to $66 from $60, while keeping their rating on it unchanged at ‘Outperform’. Billionaire David E. Shaw‘s firm, D. E. Shaw & Co., reduced its holding in the company by 60% to 120,313 shares during the fourth quarter.

#3 Stericycle Inc (NASDAQ:SRCL)

 – Investors with Long Positions (as of December 31): 20

 – Aggregate Value of Investors’ Holdings (as of December 31): $270.76 million

Stericycle Inc (NASDAQ:SRCL) saw its popularity among hedge funds slump heavily during the fourth quarter with ownership of the company among investors tracked by us declining by 14 and the aggregate value of their holdings falling by $142.5 million. The main reason behind that seems to be the disappointing numbers the company posted for its fiscal 2015 third quarter, following which its stock fell swiftly. Stericycle Inc (NASDAQ:SRCL) is also the only stock on this list, which is currently trading in the red for 2016. Several analysts feel that investors should avoid Stericycle’s stock at this juncture since it is performing poorly relative to its peers, but trades at a higher valuation of forward P/E of 20.35 compared to them. On February 8, analysts at RBC Capital reiterated their ‘Sector Perform’ rating on the stock, but lowered their price target to $119 from $120, which represents a potential downside of 2% from the stock’s current trading price. Barry Dargan‘s Intermede Investment Partners initiated a stake in Stericycle Inc during the fourth quarter by purchasing 213,519 shares.

#2 Republic Services, Inc. (NYSE:RSG)

– Investors with Long Positions (as of December 31): 21

– Aggregate Value of Investors’ Holdings (as of December 31): $430 million

The number of investors tracked by us with long positions in Republic Services, Inc. (NYSE:RSG) declined by 30% during the October-December period. However, the aggregate value of investors’ holdings in the company saw an increase of $56.4 million at the same time. Though Republic Services, Inc. (NYSE:RSG)’s stock has appreciated by 7.75% this year, the $0.30 per share quarterly dividend the company pays currently still translates into a respectable annual dividend yield of 2.50%. For its fourth quarter, the company managed to beat analysts’ EPS expectations by $0.01, reporting EPS of $0.50, but its revenue at $2.29 billion came a tad below the consensus estimate of $2.30 billion. Billionaire Mario Gabelli‘s GAMCO Investors was the largest shareholder of Republic Services, Inc. among funds tracked by us at the end of December; it held over 3 million shares of the company.

#1 Waste Management, Inc. (NYSE:WM)

 – Investors with Long Positions (as of December 31): 52

 – Aggregate Value of Investors’ Holdings (as of December 31): $3.25 billion

Despite the ownership of Waste Management, Inc. (NYSE:WM) among investors from our database inching down by two during the fourth quarter, the company held on to its spot as the most popular environmental stock at the end of 2015. Like the stock of most environmental companies this year Waste Management, Inc. (NYSE:WM)’s stock is also trading in the green for the year, currently up nearly 9% year-to-date. The company recently hiked its dividend to $0.41 per share from $0.39, which at its current stock price represents an annual dividend yield of 2.79%. Waste Management is expected to report its fiscal 2016 first quarter results at the end of next month and the consensus among analysts includes EPS of $0.56 on revenue of $3.09 billion. For the same quarter of the previous year, the company reported EPS of $0.49 on revenue of $3.00 billion. Waste Management’s stock currently sports an average rating of ‘Overweight’ and an average price target of $58.22. Billionaire Israel Englander‘s Millennium Management increased its stake in the company by 55% to 766,309 shares during the fourth quarter.

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