Solid Waste Should Be Part Of Portfolios, Says Wunderlich
Wunderlich Securities said in a research report released today that they believe it is time for solid waste should be a core portfolio holding.
They listed a Buy rating for IESI-BFC (NYSE: BIN) at a target price of $27, Republic services (NYSE: RSG) at a target of $37, Casella Waste Systems (NASDAQ: CWST) with a target of $5.50, and Waste Management (NYSE: WM) with a target price of $40.
Low inflation is considered a plus by Wunderlich in this case despite effecting municipal contract pricing negatively, as it positively effects capital spending tied to commodities such as steel, high density polyethylene, and aggregates, which are inflation sensitive. Wunderlich also said that earth-moving costs trend downward when inflation is low.
Collection volumes are also trending positively - albeit modestly - according to Wunderlich, with supporting evidence coming in from municipal solid waste trends at landfills.
However, Wunderlich warned that some areas are lagging in these growth trends, such as Southern California, Phoenix, Las Vegas, and parts of Florida. Fuel prices have also been rising year over year, but surcharges have kept pace thus far.
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