Clean Harbors currently trades at $304.41 and has been a dream stock for shareholders. It’s returned 246% since April 2021, blowing past the S&P 500’s 65% gain. The company has also beaten the index over the past six months as its stock price is up 31.3% thanks to its solid quarterly results.

Is now the time to buy Clean Harbors, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free.

Why Is Clean Harbors Not Exciting?

Despite the momentum, we're cautious about Clean Harbors. Here are three reasons we avoid CLH and a stock we'd rather own.

1. Lackluster Revenue Growth

We at StockStory place the most emphasis on long-term growth, but within industrials, a stretched historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Clean Harbors’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 5.6% over the last two years was well below its five-year trend.

2. Projected Revenue Growth Is Slim

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Clean Harbors’s revenue to rise by 4%, a slight deceleration versus its 13.9% annualized growth for the past five years. This projection doesn't excite us and implies its products and services will see some demand headwinds.

3. Recent EPS Growth Below Our Standards

Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.

Clean Harbors’s EPS grew at a weak 2.8% compounded annual growth rate over the last two years, lower than its 5.6% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

Final Judgment

Clean Harbors isn’t a terrible business, but it isn’t one of our picks. With its shares topping the market in recent months, the stock trades at 36.6× forward P/E (or $304.41 per share). Beauty is in the eye of the beholder, but we don’t really see a big opportunity at the moment. We're fairly confident there are better stocks to buy right now. We’d recommend looking at our favorite semiconductor picks and shovels play.

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