A year or two ago I felt like we were writing about CWY &/or Bingo almost weekly but following the $2.3bn takeover of Bingo by Macquarie Infrastructure the space has felt a little less interesting. However, CWY has continued to perform strongly over the last 2-years in a sector where everybody sees longevity i.e. environmentally friendly waste management and recycling. The question is does the recent 11% dip in share price offer compelling value when much of the index has corrected by twice as much.
CWY actually converts much of its collected waste into valuable commodities as part of the “circular economy” hence by definition inflation should help its profitability as it salvages commodities that are increasing in value. The stock isn’t overly cheap trading around 27x estimated 2023 earnings but we like the company’s future prospects with earnings growth likely to average ~8% pa over the next 2 years – we would be comfortable accumulators into weakness.
MM likes CWY in the $2.50-70 region
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