The healthcare business is immune to an ill economy, people need vaccinations, sutures and blood screens regardless of business cycles. Medical waste disposal isn’t quite as simple as hauling away household garbage or yard clippings — this business falls under the watchful eyes of the Environmental Protection Agency (EPA), the Department of Labor, Occupational Safety & Health Administration (OSHA) and several other regulatory bodies. In short, that means two things: Demand is constant and barriers to entry are high. Stericycle (SRCL, Nasdaq) is the dominant player in this field. The firm safely empties all those bins, and also removes discarded waste from research facilities, laboratories, hospitals, surgical centers, pharmacies, veterinary clinics and even dentists’ offices. Add them up, and the company has won the business of over 430,000 customers around the world. ... Stericycle’s safety record and environmentally-friendly waste treatment system speak for themselves. So customers don’t hesitate to sign up for 3-5 year contracts that renew automatically — which keeps retention rates consistently above 95%. With the firm adding new customers and keeping old ones, revenue has soared from $67 million to $1.1 billion during the past decade. Meanwhile, profits have doubled every 2.2 years on average and jumped +28% last year despite the recession. Remarkably, the firm has either met or exceeded earnings expectations every single quarter since its IPO in 1996.
Nathan Slaughter, StreetAuthority Half-Priced Stocks
