NEW YORK (TheStreet) -- With presidential candidates denying global warming is man-made, the drought in California, bees dying, and air pollution, we decided to check Quant Ratings for companies to buy in the environmental and facilities services, companies that deal with the effects humans have on their immediate environment.
Regardless of who believes global warming is man made or what is causing California's drought, humans have an impact on the environment every day, and here are three companies that deal with these issues (and profit from them). These companies are waste services that provide commercial, industrial, residential, or municipal waste collection, transfer, or disposal. Basically, they collect our garbage.
These are the top three to buy, according to TheStreet Ratings,TheStreet's proprietary ratings tool.
TheStreet Ratings projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.
Buying an S&P 500 stock that TheStreet Ratings rated a buy yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a buy yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.
Check out which environmental and facilities services companies made the list. And when you're done, be sure to read about which volatile aerospace and defense stocks to buy now. Year-to-date returns are based on June 22, 2015, closing prices. The highest-rated stock appears last.RSG data by YCharts
3. Republic Services, Inc. (RSG)
Rating: Buy, A-
Market Cap: $14.2 billion
Year-to-date return: .35%
Republic Services, Inc., together with its subsidiaries, provides non-hazardous solid waste collection, transfer, recycling, and disposal services for commercial, industrial, municipal, and residential customers in the United States. It operates through three segments: East, Central, and West.
"We rate REPUBLIC SERVICES INC (RSG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, reasonable valuation levels, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- RSG's revenue growth has slightly outpaced the industry average of 1.2%. Since the same quarter one year prior, revenues slightly increased by 4.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- 39.88% is the gross profit margin for REPUBLIC SERVICES INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 7.94% is above that of the industry average.
- Net operating cash flow has increased to $496.10 million or 25.15% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -10.65%.
- You can view the full analysis from the report here: RSG Ratings Report