Casella Waste Systems (NASDAQ: CWST) is
an integrated regional solid waste services company that provides collection, transfer, disposal, recycling and resource management services to residential, industrial and commercial customers, primarily in the eastern United States. The firm owns and/or operates 38 solid waste collection businesses, 38 recycling facilities, 32 transfer stations, 11 subtitle D landfills, two landfills permitted to accept construction materials, and one waste-to-energy power generation facility. Casella also has a 50% stake in GreenFiber, a joint venture with Louisiana-Pacific (NYSE: LPX) that produces cellulose insulation.
The company surprised the Street last week, when it reported Q4 revenues of $139.6 million and a loss of 18 cents per share. Analysts had been expecting $137.7 million and a loss of 22 cents. Management also guided FY09 revenues to $610-$628 million, versus consensus of $605.67 million.
The CWST
price popped on the news and then moved into a bullish "pennant" consolidation pattern. Stocks frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with three "strong buys", one "buy" and three "holds". Analysts expect a 78% growth rate, through the next year. The CWST Price to Sales ratio (0.58), Price to Book ratio (2.52) and Price to Cash Flow ratio (5.63) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 92% of the outstanding shares. Over the past 52 weeks, the stock has traded between $9.64 and $16.20. A stop-loss of $11.25 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold a position in either of the stocks discussed above.
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