Man is a wasteful being, and landfills all over the world show it. The environmental movement in recent years has tried to prove to us that this is a problem, emphasizing that space on the earth is finite, and time likewise.
What is encouraging and exasperating all at once is that we recognize the wisdom of the "three Rs" -- reduce, reuse, recycle -- but don’t always follow up on that wisdom. For man, as we have noted, is a wasteful being.
Carting this stuff away has become an industry in itself. Waste management involves the collection, storage, and disposal of household waste to that generated at nuclear power plants.
In the United States alone, every year, about approximately 230 million tons of "trash" is generated -- or, about 4.6 pounds per person per day. Less than one-quarter of it is recycled; the rest is incinerated or buried in landfills. With a bit more planning, experts say, more than 70% of landfilled waste in the U.S. could be reused or recycled, stuff like glass, metal, and paper.
Another sobering thought: according to the U.S. Environmental Protection Agency, many of America’s landfills have been closed, either because they were full or were contaminating groundwater. Once that happens, the groundwater is near impossible to clean up. As to whether the trash could be burned once landfill space runs out, the answer is yes, but the result is toxins released into the air and ash that needs disposal in hazardous-waste landfills.
So the problem is not going to be solved with the same mindsets and methods that got many of us into this mess in the first place. Where does that waste go? Radical and pioneering thinking is called for, and the call is being heeded by some innovative companies.
When it comes to companies with new technology to deal with waste, most of us think of Houston-based Waste Management (NYSE:WM), which boasts the status as America’s leading providers of "integrated environmental solutions". The company website heralds how WM uses waste to create enough energy to power more than one million homes every year, and adds its goal is to double that number within 10 years.
WM has lots to be proud of: as North America’s largest recycler, the company managed more than seven million tons of recyclable commodities last year and hopes to make that number 20 million by 2020. By the end of 2009, WM had 119 landfill-gas-to-energy projects producing 540 megawatts of power, the equivalent of powering approximately 400,000 homes.
The company’s trucks are powered by natural gas, more than 800, with a view to adding 200 more this year, and WM claims to use its technology to reduce the fuel burn of every truck in their fleet. When fully implemented, this is expected to save nine million gallons of fuel per year.
That kind of size is also reflected in WM’s bottom line. The company posted $11.79 billion U.S. of revenues in 2009, generated $1.2 billion U.S. in free cash flow, and returned $795 million U.S. of that cash to shareholders through share repurchases and dividends – no mean feat in a recession year.
WM’s stock price registered $33.83 the day after Labor Day, quite a bit off its 52-week low of $28.28 plumbed last October, but still below its yearly high of $35.99 achieved last April.
To the smaller-cap end of things, now, from which Tarpon Springs, Florida-based MagneGas Corp. (OTCBB:MNGA) hails. This is a company that prides itself on recycling liquid waste into a "clean burning, cost competitive fuel", according to the opening page of its website. MNGA’s slogan cuts right to the chase: "We Clean the Environment".
MNGA’s breakthrough technology, called PLASMA ARC FLOW(TM), takes liquid wastes and converts them into usable byproducts, including a gaseous fuel known as MagneGas(TM), and sterile effluent liquid being looked at for liquid fertilizer. The company trumpets that MagneGas can be interchanged or even mixed with Natural Gas, and claims the substance produces the lowest greenhouse gas emissions when compared to fossil fuel. Among its many uses, cooking, heating or powering natural-gas-fuelled automobiles.
Nor is word of this technology falling on deaf ears; mid-August brought word that MNGA had enjoyed its first-ever profitable quarter, spotting $282,372 worth of black ink -- more than $120,000 in the first six months of the fiscal year. This was made possible by record revenue of $1.3 million U.S., $1.5 million for the first six months. What’s more, the word is getting around worldwide; MNGA entered the potentially lucrative China market with 20% ownership of a joint venture, and also acquired 20% of European and African markets.
From a forward-looking and market opportunity angle, MNGA is certainly a bargain. On September 7, shares closed at 11 cents, in the lowest region of a 52-week range that bottomed out at 5.4 cents last Christmas, well below its yearly peak of 45 cents reached in mid-September 2009. With all the good vibes, and with the revolutionary technology to keep waste at bay, investors should look at considering MNGA in their portfolios.
Also in the mix is a Vancouver-based company that is also making great strides in the fight to reduce mankind’s carbon footprint, by converting waste from landfills into productive energy.
Westport Innovations (Nasdaq:WPRT) has staked its claim as a global leader in alternative fuel, low-emissions technologies enabling engines to burn fuels such as compressed natural gas (CNG), liquefied natural gas (LNG), hydrogen, and -- like MNGA -- biofuels such as gases produced in landfills.
WPRT has built its business by partnering with natural gas fuel and infrastructure providers, global automotive original equipment manufacturers, international government agencies, universities and research laboratories, and industry-related organizations and alliances.
In August, WPRT reported quarterly consolidated revenues of $25.5 million, up 17%, from the same quarter the year before. Its net loss for the three months ended June 30, 2010 was $8.1 million, or a loss of $0.21 per share, compared to net loss of $7.9 million, or a loss of $0.25 per share, in the three months ended June 30, 2009.
This progressive company is trading in the upper end of a 52-week range that crested in late July at $21.34, having slumped all the way to $9.23 in October 2009. In early September of this year, the price was around $16.80, certainly not in the small cap world, but a worthy investment for some budgets.
The truth is that waste is still out there, and the message is not hitting home with some people as quickly as the environment would like. But companies are combating the problem by developing, refining and using technology to reduce waste and put its byproducts to better use. Such firms should be encouraged in these endeavors with investor dollars.
