Tags: MEA | Metalico | SCH | Schnitzer Steel Industries | metals | stock

Recycler Metalico Turning Scrap into Cash

By Constance Gustke   |   Tuesday, 07 Jun 2011 12:38 PM

These are salad days for metal recyclers. Scrap prices have more than quadrupled since 1999 as commodity prices keep ratcheting up. And there’s an extra value kick: recycling metals is cheaper than producing them. Metalico (MEA), a leading scrap metal recycler, stands to gain. The company recycles steel and iron (ferrous), along with highly valuable metals like copper and aluminum (non-ferrous). Also, this year Metalico began recovering precious metals like palladium and rhodium from catalytic converters.

To dominate its Northeastern U.S. base, Metalico regularly hits the acquisition trail. This tactic added 5,400 tons of ferrous scrap metal, along with 768,000 pounds of non-ferrous scrap, to first-quarter revenues.

Revenues have surged. First-quarter revenues hit $182 million, up 32 percent, helped by higher metals prices. Net income rose 38 percent. Earnings per share were 27 percent year over year. Metalico CEO and founder Carlos Aguero said results reflected “an improving economy and strong commodity pricing.”

Overlooked value

Despite glowing results, global player and competitor Schnitzer Steel Industries (SCH) gets more notice. Yet of the three analysts tracked by Thompson/First Call who cover Metalico two have strong buy recommendations and the other has a buy call.

Canaccord Genuity analysts are bullish on metals recycling and recommend Metalico, citing its growing revenue, aggressive acquisition strategy, and undervalued stock price.

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These are salad days for metal recyclers. Scrap prices have more than quadrupled since 1999 as commodity prices keep ratcheting up. And there s an extra value kick: recycling metals is cheaper than producing them. Metalico (MEA), a leading scrap metal recycler, stands to...
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