Ride the Winners, Accumulate the Laggards
- February 17, 2021
2021 Waste Sector Positioning
With the solid waste names underperforming the market rally while specialty waste names have outperformed in the last three months, Oppenheimer analysts are looking for a retrenchment of support for the sector overall to begin manifesting this year.
They see prospects for accelerating growth in 2022, modest M&A expectations, strong ESG performance and attractive relative valuations in a compressed market cycle as potential drivers for outperformance by solid waste companies Republic Services, Waste Connections, and Waste Management. Downside appears fairly limited with robust free cash flow generation and attractive dividend yields in a low-rate environment arguing for ownership of the group.
At the same time, our analysts see opportunity to continue to ride the winners of 2021 so far in Clean Harbors and Covanta, both beneficiaries of rallying commodities and with unique catalysts that could support continued momentum.
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