Looking at the Cleanaway Waste Management Ltd (ASX: CWY) share price, it hasn't been overly impressive until the last couple of years. Previously, when investors talked about the growth stocks held in their portfolios, it was unlikely for someone to mention Cleanaway as a major holding, or if any holding at all. However, looking at Cleanaway in its current position presents plenty of reasons why this could be a strong buy. Here are just a couple:
1: Sustainability
Waste has always been a huge problem for the future sustainability of the planet. Cleanaway plans to combat this issue with its three primary divisions: solid waste services, liquids and health services and industrial services. Both its solid waste as well as liquid and health services are market leaders in Australia. With the acquisition of Tox Free Solutions Ltd in 2018, Cleanaway has been able to provide unrivalled service to the healthcare industry by handling its waste streams. Solid waste services, a key business for Cleanaway, continues to grow and remain as the market leader in its coverage network across Australia.
2: Financial position
Cleanaway shocked the market with its recent half-year results, for good reason. Net revenue and EBIT were both up 47.4%. Additionally, NPAT was up 52.6% with a total increase of 26.9% to its EPS. If that's not convincing enough, Cleanaway also increased its organic cash flow by 55.7% which can explain why the company also raised its dividend per share by 50%. This performance resulted in Cleanaway being one of the top gainers in the recent reporting season.
When profitability is broken down into Cleanaway's three primary divisions, strong double-digit and even triple-digit increases in EBIT were present. Its solid waste services showed a 27.3% increase, liquid and health services showed an 81.4% increase and its industrial services showed a ridiculous 425% increase.
Foolish takeaway
Cleanaway is showing great promise as a growth stock in the last couple of years. With its sustainable business model and strong financial position, I believe the Cleanaway share price could very well be trading higher than its current price of $2.24.
For the growth-focused investors who have previously ignored Cleanaway, maybe this reporting season has changed your mind. If these figures don't impress you then I don't know what will.
