Advanced Disposal Proves A Growth Stock Can Be A Defensive Play

The company came out with 19.25 million shares in a price range of $18–$20, eventually priced at the lower end of $18 earlier this month. The stock opened at $20.50 on October 6 and only once traded below the $19 level — at $18.86 on October 20.

Analyst Steven Fisher said in a research note, "We expect ADSW to reduce leverage over the next few years, taking debt/EBITDA down to below 4.0x from 5.7x prior to the IPO. We expect this to be achieved by a combination of debt reduction and EBITDA growth. As ADSW de-levers and delivers, we expect the multiple to expand to become more in-line with peers over time."

The brokerage listed the following key factors as justification to remain positive on the company's growth prospects:

• There is potential for expansion geographically based on UBS Evidence Lab analysis.
• Macroeconomic conditions, particularly the housing sector, remain encouraging.

At last check, Advanced Disposal was flat on the day, up a penny from the opening price of $20.10.