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TheStreet Open House

Global Warming and Preparing for the Big One

Stock quotes in this article: SI, GE, SAP, CLH

Evergreen Oil is a California-based environmental services company that is one of the state's largest collectors of waste oil and runs the only re-refinery in the state. Clean Harbors is funding the $60 million transaction through available cash on its balance sheet.

In the announcement, Clean Harbors' management pointed out that the acquisition of Evergreen Oil is beneficial to the company in a number of ways.

It expands Clean Harbors' geographic footprint in re-refining to include coverage in the Western U.S. -- complementing its Indiana facility in the Midwest and Breslau facility in Eastern Canada;

It provides Clean Harbors with the second-largest collector of waste oil in California; and

It provides Clean Harbors with a number of valuable ancillary waste assets, including a permitted Treatment, Storage and Disposal Facility, or TSDF.

Analysts will have to go back to their number-crunching machines to see how the acquisition might impact CLH's EPS estimates for the current year. Analysts had been anticipating close to a 13% increase in EPS and an impressive 60% increase in revenue.

Concerning the Evergreen Oil purchase, Clean Harbors' CEO explained, "We believe that we are purchasing this asset at a favorable price for our shareholders. While we plan to invest some capital into the re-refinery to enhance its layout and productivity, the plant is relatively new, with major portions of it having been rebuilt following a fire at the facility in 2011."

Here's a one-year look at how Clean Harbors' stock has performed. You'll see that its return on invested capital hasn't been able to pay off yet, but its quarterly revenue per share numbers have improved nicely.

CLH Chart CLH data by YCharts

Whether global warming is your cup of tea or not really doesn't matter. What matters is that environmental disasters are occurring with unfortunate regularity and super-destructive storms like Sandy and Katrina have given us examples of the devastation they cause.

Droughts, wildfires, floods and normal atrophy will continue to make rebuilding and infrastructure replacements a bigger opportunity for companies like Siemens, GE and Clean Harbors.

If there are multiple "Big Ones" in the months and years ahead, there's no telling how astronomical the clean-up and restoration costs may be. It'll be a nightmare for the people affected and the insurance companies that insure them.

Siemens, General Electric and Clean Harbors are sensible investment themes, just in case. Here's hoping for the best while we all prepare for the worst!



At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Marc Courtenay is the founder and owner of Advanced Investor Technologies, LLC, as well as the publisher and editor of www.ChecktheMarkets.com.

Courtenay holds a Master's of Science degree in Psychology from California Polytechnic State University, and is a former senior vice-president of Investments for two major brokerage firms. He's been a fiercely independent investment "investigator" and a consulting contributor to the investment publishing world for over 30 years. In addition to his role as an investment publisher and analyst, he serves as a marketing consultant to the investment media industries.

In his role as a financial editor, he specializes in unique investment strategies, overlooked stock investments, energy and resource companies, precious metals, emerging growth companies, the prudent use of option strategies,real estate related opportunities,wealth preservation, money-saving offers, risk management, tax issues, as well as "the psychology of investing". Because of his training and background in Clinical Counseling and Psychology, he enjoys writing about investor behavior, the herd mentality, how to turn investment mistakes into investment breakthroughs and the stock market's behavioral trends and patterns.


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