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Usa Waste May Be On Top Of The Heap

Inside Wall Street


The trash business is, well, in the dumps. Environmental stocks, very much the in-group of the 1980s, have fallen into disfavor, mainly because they failed to measure up to expectations. But not all of them. One that has been growing fast--with high margins--is USA Waste Services.

Its stock, though, has not escaped the downdraft, having fallen from 15 a share in January to 11 recently. But it is one of the few antipollution stocks that is gaining fresh support from some savvy pros.

"This could be a Browning-Ferris in the making," says analyst Ken Leung of Smith Barney, referring to the $3.5 billion waste-management company whose stock is near its high of 32. He notes that John Drury, for 10 years the president and chief operating officer of Browning-Ferris, has lately joined USA Waste as CEO.

In a year, Leung expects the stock to hit 20. One factor: USA Waste's recent merger with Envirofil, another solid-waste-products company. The combination has doubled USA Waste's $78 million revenues, to a projected $175 million this year. By yearend, says Leung, the company should be able to grow at 20% or better. So for 1995, earnings are expected to hit $1.05, up from 85 cents this year, he figures. Last year, USA Waste made 36 cents.

Another bull on the stock is Andrew Barish of Robertson Stephens, a San Francisco investment bank. With its "strengthened management team," USA Waste could be "one of the most exciting stocks" in the tarnished industry over the next year, he says.GENE G. MARCIAL

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