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Waste Not Want Not Company Cuts Waste and the Share Price Prospects Look Good

By Malcolm Stacey | Tuesday 5 December 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Hello, Share Fanciers. Pennon Group (PNN) is one of those companies which gives investors a certain pride. That’s because what it does helps the planet.

Pennon has two main parts. Water and Waste Management. The Water bit has earned praise from watchdogs for its efficiencies and it's produced some of the tightest economies in the business. The company says it's on track for the year, which is more than can be said of some utilities, and the interim divi has risen 8% to just short of 12p. The shares moved slightly higher on the news, though the prospective yield is still a tasty 4.8%.

The waste management bit is called Viridor. It takes away your household rubbish, sifts through and then recycles it. The rest is burned to make electric power. Waste isn’t an easy thing to make cash out of. That’s why it’s not been done much in the past. But improving technology is making it easier. And once again Pennon’s cost cutting zeal is raising profits.

In the latest half year figures, we see that before tax, interest, depreciation and so on, the group made 3.3% more than last time at £253.5 million. This may not be a spectacular performance, but we all love the right direction, don’t we?

The company expects waste management to make more money from 2018. As far as I can see, many items, including some plastics and coated cardboards are not recycled by my local council. It would like to, but hasn’t yet got the technology.

Pennon should be able to find more of the right gear and put it in place before long. With the right techniques, waste management seems an easy way to find commodities without digging them out of the ground. Such commodities would also be partly-processed, already.

And now it’s time to recycle myself to the Punter’s Return.

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