“Yucca Mountain is the location in Nevada that the U.S. Congress voted as the long-term storage facility for the nation’s nuclear waste, a process begun back in 1982. [It quickly became] a political issue, with every major presidential candidate pledging to halt the project in gambits to earn Nevada’s electoral votes. And now, effectively, Yucca has been tabled by the president, who ordered federal analysts to halt the final review of safety data. With no safety sign-off, no Yucca storage. As a result, nuclear waste will continue to be held where it has been, in less than ideal facilities primarily located in New York, Pennsylvania, North Carolina, South Carolina and Illinois (but many in other states, usually on the site of the power plants themselves). The problem is that storage capacity is running out, with any more temporary storage either likely to be found inadequate and therefore blocked by the courts, or simply facing the same heated local opposition that stifled Yucca. This is true even of lower-level hazardous waste sites. Yucca may still come to pass, but it will likely be a legal mess that takes years to resolve. We foresee the gridlock creating a trickle-down effect. Some waste sitting in the temporary repositories can be treated to be less toxic. Those companies that have the ability to treat and store various levels of waste, both nuclear and lower-level hazardous, will enjoy very high barriers to competitors’ entry and a new spurt in spending to try and mitigate what can be mitigated now.
“One company in the hazardous waste space, Perma-Fix (PESI) made an interesting decision last week: It’s shedding its businesses of lower-level hazardous waste to concentrate solely on higher-level nuclear waste opportunities. ... The company’s move in turn bolsters the competitive position of companies that can handle some nuclear waste types as well as hazardous chemicals in Superfund-type sites and industrial manufacturing processes.
“US Ecology, Inc. (ECOL, Nasdaq) should benefit from the lack of a central nuclear waste depository, the exit of Perma-Fix from non-nuclear waste business and the large backlog of hazardous waste sites in the U.S. The Idaho-based company operates just one of two full-service low- level radioactive waste sites in the country in Richland, Washington [as well as] other sites that handle more common waste—contaminated soils from industrial processes and lower-level radioactive waste.
“For the past four years, US Ecology’s main non- radioactive waste business has been taking the waste soils from a notorious Honeywell site in Jersey City, New Jersey, a site so remarkably contaminated by carcinogens such as hexavalent chromium, that in some spots soil 25-feet deep needed to be carted away. That project ended this year (and the site is becoming a college campus), and US Ecology’s revenues have fallen 45% as a result, although ignoring the Honeywell business, sales were up 11% in the second quarter. Yet the company appears to be on good- enough footing that investors are accumulating the stock.
“This is in response to another high profile, legally contentious project that promises to support US Ecology’s bottom line: the General Electric Hudson River cleanup project. For decades, a GE plant in Hudson Falls, New York, outside the city of Glens Falls, emitted tons of PCBs into the river, making the 200-mile stretch of the Hudson south to Manhattan’s Battery Park the nation’s largest Superfund site. After years of legal wrangling, the EPA finally forced GE to begin cleaning up the river this year. One of three vendors to haul away that material to its various landfills is US Ecology. ...
“For the year, the company expects to earn between 57 cents and 67 cents a share net income. US Ecology also features an excellent dividend yield of over 4%. ... Long term, the company’s capacity shouldn’t be a problem: It has five years’ capacity at both Idaho and Quebec with space for more to be permitted, capacity of 10 years at Nevada and Texas, and over 20 years at Washington. ...
“After trading in a broad range between 20 and 30 from 2006 to mid-2008, US Ecology shares shifted to a range between 15 and 20 for 2008 and 2009, and then began slipping under 15 as the Honeywell job neared completion. Shares began seeing excellent volume in mid-September and strong volume support continued between 15 and 16. This should provide a very sturdy base from which shares can work higher. It’s not an explosive stock, so be wary of chasing it much higher. Shares are mildly overbought here, so buy on dips. ... Suggested Buy Range: 14-16.”
Brendan Coffey, Cabot Green Investor, 10/14/10
