Barron's isn't talking trash about Republic Services, one of the few common stocks that Warren Buffett's Berkshire Hathaway has been buying of late.
Instead the magazine was touting the stock of the Phoenix-based company in its most recent edition.
In an article titled "From Trash to Cash," Barron's predicted that the stock could rise to $37 a share in the next 12 months, up about 15 percent from its current price.
Barron's says Republic Services has solid pricing power, growing profit margins, ample free cash flow, a modest price-to-earnings ratio, manageable debt and a commitment to buying back shares and paying dividends.
Buffett and his good friend Bill Gates apparently agree.
Berkshire has added shares of the second-largest U.S. waste hauler (Waste Management is no. 1) each of the past three quarters for which the company has reported its investing activities. That has come at a time when Buffett has been paring down many stock holdings in order to finance the purchase of entire operating companies such as Burlington Northern Santa Fe and to keep insurance regulators happy with its capital ratios.
Click here for a review of Buffett's RSG purchase data on Guru Focus. Berkshire now owns about 3 percent of the company. We'll find out in a few weeks whether Berkshire added to its position in Republic Services during the three months ending June 30.
But Berkshire is a mere minnow in Republic Services compared to Gates, whose foundation and investment company own about 15 percent of the company's stock.
Buffett likes stocks with predictable business models that aren't likely to be rendered obsolete. Garbage certainly seems to fit the bill, and the "Oracle" has apparently decided that Republic Services is the best of breed in that sector.
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