Earnings Roundup: Metals Prices Boost Covanta And Umicore

Copper, Metal, Modern, Design, Architecture, Metallic

You don’t have to own mining companies to benefit from rising metals prices. Waste to energy operator Covanta and specialty metals recycler Umicore are both benefiting from skyrocketing metals prices.

Just as renewable energy and energy efficiency stocks have long shown that investors don’t have to own fossil fuel companies to benefit from rising prices of fossil fuels, recyclers like Covanta and Umicore are showing that you don’t have to own environmentally damaging mining companies to benefit from rising metals prices.

Covanta Earnings

Everyone could find something to like in last week’s first quarter earnings at Covanta (CVA).  

Revenue and income all showed strong growth over the prior year.  This was driven by strong pricing trends in metals, waste disposal (“tip”) fees, and energy prices.  These gains were achieved despite higher planned outages for maintenance in 2021 compared to the prior year.  This will reduce the need for additional maintenance outages later in the year.

In addition, the company increased its guidance for the full year, and expects further improvements to come from the strategic review as it renegotiates contracts or closes unprofitable operations.  It seems likely that many of these renegotiations will come at the 19 municipally owned plants in the US that it operates under contract.  The company also anticipates significant savings from overhead.

In short, everything is coming up roses.

  • The company is performing well
  • The macroeconomic environment is favorable
  • New plants will be coming online over the next 3 years in the profitable UK market
  • Additional savings are expected from the strategic review.

Covanta is definitely a stock to hold even in this relatively overvalued market.

Umicore and Hydrogen

Umicore (UMICF, UMICY, UMI.BR) released its first quarter update as well as a presentation on its positioning in the hydrogen economy in late April.  

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Disclosure: Long CVA, UMICF.

Disclaimer: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current ...

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