Barron's Likes Garbage (RSG)

Barron's recently wrote that they think shares of Republic Services RSG could rise to $37 in the next 12 months, and they aren't alone in thinking shares are undervalued. Bill Gates owned almost 15% of Republic's 382 million shares as of March 31 and Warren Buffett now owns 10.8 million, after adding 2.5 million shares during the March quarter. If the two of the richest men in the world love this company so much, maybe it's worth looking into. Republic Services has doubled its sales through its merger with Allied Waste Systems, which was completed in December 2008. It's also realized $180 Million in savings from the merger. Barron's thinks profits could rise more than 30% this year, to $1.71/share. Republic reports earnings on Thursday, July 29. Republic receives 29% of its revenue from commercial waste-hauling contracts, and 25% from residential contracts. Nineteen percent of its revenue comes from fees it collects at 190 landfills and 217 transfer stations. The rest is made up of industrial waste, construction and recycling. Between Republic and Waste Management, the two companies control roughly 60% of America's landfills. Republic CEO James O'Connor is hopeful of an economic recovery in 2010. He goes on to say that fewer customers are filing for bankruptcy and dumpster orders from small businesses are rising. "We are in clear view of the exit from the tunnel of the merger," O'Connor said. Evan Snyder, an analyst at Invesco Mid-Cap Core Equity Fund, which owns shares in Republic Services said, "With a recovery in volumes, this business might have greater operating leverage than some people think." The company pays a dividend of 76 cents, yielding 2.4% Many believe that is likely to increase. You Can't Afford Miss Out On These Money Making Trading Ideas