I want to clear something up, though. While I have cited these two examples of how Clean Harbors has benefited from horrific events, I don't want to paint the company as some blood-hungry hound that seeks to profit off the hardships of others. Neither Sandy nor BP's oil spill was the fault of Clean Harbors. I want to be careful in making this known. And I don't believe that anyone associated with Clean Harbors is happy about any personal damage that the company has been called upon to clean.
However, as they say, "It's a tough job, but somebody's got to do it." And as with rivals like
(WM - Get Report)
, much of Clean Harbors' revenue is predicated on cleaning up other people's messes. Unfortunately, though, there hasn't been another mess to clean up since Sandy. And investors have become "lukewarm" about Clean Harbors' stock. Although shares have posted gains of 4% on the year to date, the stock is down close to 6% over the past four months.
By contrast, during that same span, shares of Waste Management are up close to 30%, while Veolia stock is up 20%. I believe the reason for the "indifference" in the stock has much to do with Clean Harbors' $1.25 all-cash deal to buy rival Safety-Kleen, which was announced (interestingly) when the markets closed due to Sandy's destruction in New York.
I'm not suggesting that investors are angry at the deal. But it seems the Street is waiting to see what sort of value comes out of this union. On Wednesday, the company will report second quarter results, which should shed more light on the company's direction, while giving investors a fresh glimpse on what Clean Harbors can truly become.
I like the company's prospect a lot better with Safety-Kleen than I did prior to the deal. But it's going to take some time for management to "clean up" the synergistic advantages and reduce the overlap created by the acquisition. In the meantime, given that Clean Harbors is already trades at a price-to-earnings ratio of 29, which is more than twice that of Veolia and 6 points higher than Waste Management, I wouldn't rush to jump into the stock here. This is unless of course a disaster breaks.
At the time of publication, the author held no position in any of the stocks mentioned.
This article was written by an independent contributor, separate from TheStreet's regular news coverage.