Usa Waste May Be On Top Of The Heap

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.

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