Stericycle (SRCL): Insiders keen on medical waste

"Stericycle (NASDAQ SRCL) is a near-monopoly in an essential but unglamorous area, making its an excellent investment in an uncertain economy," says growth stock expert Dave Dyer.

In his Dave Dyer's Newsletter, he states, "If you have something that is dangerous, contaminated, or nasty, and you want it to go away safely, you can rely on SRCL, the leader in medical waste."

"I first recommended the stock almost a year ago, but there is so much good news that I thought this would be a good time to recommend it again.

"And while the stock's 12.4% gain since last August is not spectacular, the S&P 500 is down 14.1% over the same time period -- so SRCL has outperformed the market by a wide margin.  

"SRCL is North America's largest provider of medical waste services.  In fact, if a major customer wants to contract with a single customer for nationwide services, SRCL is the only choice.

"The core of their business is a fleet of route drivers who visit medical facilities and remove the medical waste that can’t be legally disposed of by normal means. The next time you get a shot at the doctor’s office, watch what they do with the used syringe. Chances are, it will be deposited in a special red container with a Stericycle label on it.   

"SRCL treats medical waste with the same care and precision that Federal Express uses to track a package. Their BioTrack system uses bar codes and OCR to follow the waste from pick up to ultimate disposal.

"This system helps avoid any errors, gives them a clear audit trail for the regulators, and gives their customers a sense of security. 

"Since medical waste disposal is a highly regulated industry, SRCL has developed  a great deal of expertise in the world of government regulations and now provide consulting and advice on how to stay in compliance. They also now handle the complex process of managing recalls of pharmaceutical products.  

"Since their founding in 1989, they have grown to be a $5 billion market cap company with almost 400,000 customers. They now operate in the United Kingdom, Ireland, Canada, Mexico, and Argentina, and have acquired 130 smaller competitors. 

"SRCL’s revenue has shown consistent growth, as usual. Revenue has increased from 17% to 21% per quarter for the last four quarters. Over the same period, their EPS has increased from 22% to 29% per quarter. They also have a solid 19% ROE.

"Now for the new events that make this a timely recommendation. On July 16, two long time insiders reported $20 million worth of purchases of SRCL stock. There have been other insider purchases over the life of the company, but nothing of this size had been reported.

"Insiders can sell for lots of reasons, but insider buying is a reliable sign that the insiders think it is a good deal. A large insider buy like this one is an even better sign.

"Chairman Jack Schuler and director John Patience said they bought the shares because they are 'a good investment' and said that Stericycle's business is well insulated from the troubles that are roiling the markets.

"Mr. Patience said his recent transactions were prompted by a dip in share price, which he said was related to overall nervousness in the markets rather than the company itself.

"Even if the market has not really bottomed out, this is an excellent stock to consider because its business is almost entirely immune to economic cycles. This looks like a good time to own SRCL."