Solid Waste & Recycling

Feature

Waste Stock Watch (October 01, 1998)

Shortly after the release of the August/September issue of this magazine, the Bank of Canada raised interest rates by one per cent (as was discussed in this column). It had an immediate impact on inte...


Shortly after the release of the August/September issue of this magazine, the Bank of Canada raised interest rates by one per cent (as was discussed in this column). It had an immediate impact on interest-sensitive stocks and the Toronto Stock Exchange (TSE) as a whole decreased sharply soon after. The dollar began to rebound and was trading in the 67-cent range. In a directly related matter, only weeks later, the U.S. Federal Reserve lowered interest rates by a quarter of one per cent and the Bank of Canada quickly did the same. This leaves the bank’s prime rate at 7.25 per cent and the US prime rate at 8.5 per cent. There is widespread speculation that the U.S. Federal Reserve will lower interest rates further and quite likely the Bank of Canada will follow suit. This could bring on a rally in equities and give some support to a sagging Canadian stock market.

The Asian crisis has continued to impact the worldwide economy and stock markets everywhere are well below their highs of less than a year ago.

The Solid Waste Index followed this pattern and was dragged down to close at 7,479, the lowest point since inception. In the past two months, all but one stock on the index dropped in value–Sani Gestion Inc. had an excellent two months and closed up 6 per cent at $7.60. (During the same period, the TSE dropped by almost 13 per cent.) This situation could present some excellent purchasing opportunities in the months to come.

Solid Waste Index

Index Companies Symbol Exc Jan30 July 31 Sept 25 %Index %Chng Shares Orig Valu CurValu
Safety-Kleen Corp. SK N.Y. $ 3.94 $ 3.94 $ 3.31 15 -16% 286 $1125 $ 946.66
Bovar Inc. BVR T.O. $ 0.61 $ 0.78 $ 0.72 10 -7% 1230 $ 750 $ 885.60
Browning Ferris Industries BFI N.Y. $34.56 $35.19 $32.63 10 -7% 22 $ 750 $ 717.86
Conor Pacific Env. Tech. CPA T.O. $ 0.75 $ 0.90 $ 0.70 10 -23% 1000 $ 750 $ 700.00
Marsulex MLX T.O. $ 6.00 $ 7.80 $ 4.95 10 -37% 125 $ 750 $ 618.75
Waste Management Inc. WMI N.Y. $36.75 $55.13 $ 48.75 10 -12 20 $ 750 $ 975.00
Allied Waste* AWIN Nasdaq $20.38 $28.25 $ 25.06 10 -11 37 $ 750. $ 927.22
Anadime AEM T.O. $ 0.80 $ 0.35 $ 0.32 5 -9% 684 $ 375 $ 218.88
Philip Services Inc. PHV T.O. $12.10 $ 3.86 $ 1.54 10 -60% 31 $ 750 $ 47.73
Group Sani Mobile Inc. SNB Mtl. $ 1.10 $ 0.90 $ 0.70 5 -23% 341 $ 375 $ 238.70
Sani Gestion Inc. SNG.A Mtl. $ 5.30 $ 7.15 $ 7.60 5 +6% 71 $ 375 $ 537.74
Total* 100% 7500 7478.63
(Note: numbers rounded, * denotes weighting change)
Statistics: Starting Point July 31 September 28 Percentage Return
Solid Waste Index 7500 8796 7479 -0.28%
TSE Composite: 6329 6931 5845 -12.76
DOW: 7322 8883 8028 +1.54%
The Solid Waste Index is calculated on a bimonthly basis. In order to maintain consistency and to meet the publishing deadline, it’s calculated on the last Friday of the second month of the given time period. The graph is plotted on a biweekly basis and the final point on the graph represents the closing values for the three indices as of Friday, September 25. The index was started at a value of 7,500 points so that its magnitude is in the same range as the DOW and the TSE. It is made up of a proportional representation of the firms listed and broken down by the itemized percentages. Share quotes ignore currency.

Hot Sector News

Newalta Corp. will be added to the index in the next issue and will represent 5 per cent of the total value. Newalta is an environmental firm that operates primarily in the oilfield services area. The company is based in Calgary, Alberta and trades on the TSE under the symbol NAL. To make 5 per cent available, Philip Services Corp. will be decreased to 5 per cent (from 10 per cent). This is the second weighting drop for Philip, whose stock has continued to fall. At press time, the stock was trading below the one-dollar level on the TSE. While corporate raider Carl Icahn is now the largest shareholder, the troubled company is still trying to sell its metal group to decrease its $1.1-billion debt. A new interim CEO believes the company can turn things around once the debt is reduced and the operation is fine-tuned.


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