Environmental Protection

Recycling Makes Up 2% of U.S. GDP

The recycling industry offers investors one of the few ways to profit during the current recession, according to a report released April 2 by Progressive Investor, "Investing in Recycling."

"Ever escalating energy prices, commodity price inflation and scarcity, and global environmental concerns have coalesced into a 'perfect storm' for the industry," says Eric Prouty, senior energy analyst, Cannacord Adams.

Many people aren't aware of the central role the recycling industry plays these days. It pulled in $236 billion in revenues last year and employed more than 1 million people. The industry accounted for about 2 percent of the U.S. gross domestic product in 2007.

The publication identified the following trends benefiting the industry:

•Higher energy costs make recycled materials more economically valuable. Example: energy accounts for 20 percent to 30 percent of the cost to make metals such as aluminum and zinc.

•Rising metal prices -- partly from growth in India and China -- create strong economic incentives to recycle all kinds of metals.

•Recycling benefits from the attention to climate change for its ability to reduce the energy intensity of manufacturing and methane generated by landfill waste.

•Growing recognition that natural resources are scarce, finite, and increasingly expensive to mine. Example: virgin copper and zinc supplies could be completely exhausted within decades.

•Rising concerns about pollution from discarded electronics

The report profiles the top recycling stocks, including Casella Waste Systems, Metalico, Schnitzer Steel, LKQ Corp., Interface, and Sims Group.

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