This is the third in a series of trend-spotting tips from Hilary Kramer's newly-released book, Ahead of the Curve. Another tip I make use of in my book is this: It pays to think like a detective! The key is to collect clues wherever they are and use them to come to a conclusion about how to solve the crime -- or in this case, to solve the problem of how to make profitable investments.
This tip came into play the other day when I was walking down the street on a garbage day in New York. The bags from an apartment building were piled so high they'd spilled over to block the sidewalk. After navigating this minefield, I got to the subway, on my way out at my stop, I dropped my newspaper in a rubbish bin instead of recycling it -- and noticed that the bin was full of other newspapers that should have been recycled.
So what does this mean? While everyone is concerned about the environment these days, we're all having trouble changing our lifestyles. People are still driving SUVs and flying all the time, and we're still producing mounds of garbage. While this bothered me, it also made me realize there's lots of money to be made in garbage, which is something that will never go away as long as there are people to buy and consume things. As the population grows, and consumption grows, so too does the garbage problem.
One company that's making money in garbage is Covanta Holding Corporation (NYSE: CVA). When I wrote about this stock back in January, I emphasized that this is a "Sam Zell" company -- the brilliant billionaire and entrepreneur owns 23 million shares of the company's stock.
The company handles waste disposal and energy production, something that will always be in demand, and it's also looking ahead by focusing on turning waste to energy. The company also engages in power production
and water services, as well as insurance.
Acquisitions have been a big part of CVA's strategy; Sam Zell has a great eye for companies and the savvy to integrate them successfully. The stock has been up and down a bit this year, but revenues keep climbing and as their acquisitions are integrated and deliver good economies of scale, I think we'll see this company grow nicely in the coming years.
Type of stock: A power and waste-disposal company with steady growth.
Price target: CVA is currently trading around $24, after getting up to $26 in July and then dropping as low as $22. In January I predicted it would hit $25 this year, which it managed to do. I think it could hit $30 next year, and if you grab it below $25 you'll see a nice 20% gain.
Hilary Kramer,author of the newly released Ahead of the Curve, is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.
One company that's making money in garbage is Covanta Holding Corporation (NYSE: CVA). When I wrote about this stock back in January, I emphasized that this is a "Sam Zell" company -- the brilliant billionaire and entrepreneur owns 23 million shares of the company's stock.
The company handles waste disposal and energy production, something that will always be in demand, and it's also looking ahead by focusing on turning waste to energy. The company also engages in power production
and water services, as well as insurance.
Acquisitions have been a big part of CVA's strategy; Sam Zell has a great eye for companies and the savvy to integrate them successfully. The stock has been up and down a bit this year, but revenues keep climbing and as their acquisitions are integrated and deliver good economies of scale, I think we'll see this company grow nicely in the coming years.
Type of stock: A power and waste-disposal company with steady growth.
Price target: CVA is currently trading around $24, after getting up to $26 in July and then dropping as low as $22. In January I predicted it would hit $25 this year, which it managed to do. I think it could hit $30 next year, and if you grab it below $25 you'll see a nice 20% gain.
Hilary Kramer,author of the newly released Ahead of the Curve, is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.
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