Shares of Republic Services Inc. (RSG) hit a 52-week high of $41.12 on Dec 26, 2014, before closing the trading session at $40.87, which reflects a year-to-date return of 26.7%.
Despite its strong price appreciation, this Zacks Rank #3 (Hold) stock still has strong fundamentals that may further drive the stock upward. Currently, the stock is trading at a forward P/E of 21.0x and has long-term earnings growth expectation of 6.1%.
Growth Drivers
Republic Services recently entered into an agreement to acquire Tervita, LLC – an environmental waste solutions subsidiary of Tervita Corporation, for an undisclosed amount. Tervita is a premium quality service provider offering oilfield waste services and operates three kinds of waste management and disposal facilities. It has a proven track record of efficient safety and regulatory compliance across its entire operational footprint in North America. This acquisition is expected to strengthen Republic Services in the E&P (Exploration & Production) waste sector and position it well for harnessing future growth opportunities.
With the help of Tervita, Republic Services is expected to improve on its environmental protection front while achieving growth in its major activities of waste handling, recovery and disposal.
Republic Services also announced the commencement of construction of a new recycling facility spanning 110,000 square feet in Southern Nevada. The new facility is expected to begin operations in fall 2015. The facility is expected to double the residential recycling capacity in Southern Nevada.
This facility will feature advanced recycling technologies such as automated, touch screen controls, remote access and the ability to recover all grades of plastics and containers. The new facility is expected to process roughly 1,000 tons of mixed recyclables per day and aims to cater to future residential growth in the region including increased commercial, industrial and construction recycling demands. Consequently, it is expected to generate incremental revenue for Republic Services.
Republic Services is committed to its long-term strategy, which involves the maintenance of a healthy cash flow and a disciplined approach to cash utilization. The company has strong underlying fundamentals and is set to achieve consistent earnings growth and create shareholder value.
Other Stocks to Consider
Other stocks worth considering in the industry include FTI Consulting, Inc (FCN) and The Hackett Group, Inc. (HCKT) sporting a Zacks Rank #1 (Strong Buy) and Corporate Executive Board Co (CEB) carrying a Zacks Rank #2 (Buy).
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