Stericycle (SRCL - Get Report) is the biggest medical waste management firm in the country, providing hospitals, medical offices, and pharmaceutical firms with a way to dispose of highly regulated biologically hazardous waste. Not surprisingly, dealing with the consumables no one else wants to touch is a lucrative business, with deep profit margins and a sticky customer base.
Regulation built Stericycle's niche. Because healthcare facilities can't simply toss spent needles and bloody gauze in the trash, Stericycle was able to step in and provide a simplified way of disposing of that type of high-risk waste. With health care reform passed, Stericycle should see some attractive tailwinds at its back -- namely the transition that more patients make from hospitals to medical offices for treatment. Because medical offices are lower-volume waste producers, Stericycle can collect deeper margins for their trouble.Stericycle enjoyed stair-step growth during the recession, posting new sales and profit highs each year despite an economic meltdown that was threatening less entrenched firms. While SCRL doesn't pay the dividend that its traditional waste management peers are known for, the firm's recession resistance and growth trajectory make it an attractive buy right now. Rising analyst sentiment only sweetens the pot this week.