CovantaAlternative energy comes in many forms. One of these is waste to energy processing. Covanta Holding Corp. (NYSE: CVA) is a leader in waste to energy conversion. It is also engaged in recycling and clean energy research. Based in New Jersey, the company generated $1.87 billion in revenue during the 2019 fiscal year and operates with an EBITDA margin of 17.27%.

This stock is attractive today because it’s affordable and heavily discounted from its recent peak. In the last year, the stock has gone as high as $18.38. Today’s price is just over a third of that figure. The company recently cut its annual dividend by 68%, which sent some investors on to other opportunities. However, there’s still value in this pick today.

The dividend payout for the current fiscal year had already exceeded 100% of its guidance, so reducing the annual rate makes good business sense. The company is aiming to reduce costs during the pandemic. In addition to cutting the dividend, there is also a program in place to reduce operating costs by $15 to $30 million. Notably, all the company’s waste to energy facilities are fully operational during the current health crisis.

By taking steps to operate with a leaner financial model, Covanta will be able to weather a global economic slowdown. Even with a reduced dividend, the yield today is 14.53%, and with an average target price of $10.14, there’s likely a moderate upside for investors who buy in Q2.

Key Data:

  • 1 Year Price Growth: -60.71%
  • YTD Price Growth: -53.64%
  • 3 Month Price Growth: -56.01%

All information is based on current and historical market data, as well as publicly available financial data. As with any financial decision, your own research is important. Stock market outcomes can never be 100% accurately predicted. Familiarity with historical data, individual industries, and individual stocks is key to developing a robust portfolio. Note that stock prices can fluctuate rapidly during trading sessions.