Stericycle: A Clean Play

This is not the time to give up on mid-cap growth stocks, says investment pro Andrew Lanyi, who calls the group's severe pounding a rare buying opportunity. Scores of mid-cap stocks have plunged although their profits and sales stayed at high levels in the past four quarters, says Lanyi, head of Lanyi Research, a unit of CIBC Oppenheimer in New York. "We've been heavy buyers of mid-cap growth stocks with quality earnings," he adds.

Among his top picks: Stericycle (SRCL), the second-largest U.S. provider of regulated medical waste-management services. Stericycle's patented electro-thermal deactivation destroys bacteria without producing air pollutants. Now at 18, the stock is worth 30, says Lanyi, based on the company's growth through acquisitions.

He expects profits to jump 269% this year, to 48 cents a share, from last year's 13 cents, and by 85% next year, to 89 cents. Revenues should swell to $64 million this year and to $85 million in 1999, up from $46.2 million in 1997.

Stericycle has bought 11 companies with about $30 million in total revenues this year. By the end of the first quarter, Stericycle CEO Mark Miller had signed confidentiality pacts with companies with total revenues of $80 million in the hope of completing more acquisitions, says Lanyi.

Stericycle, which is in 43 states and Canada, Mexico, and Brazil, has only 7% of the $1 billion medical-waste management industry, says Miller. "Our goal behind our acquisitions is to become No.1," he says, acknowledging he is in talks with a number of companies for more buyouts. Leader Browning-Ferris has 19% of the medical-waste market, with revenues of more than $200 million from that business.

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