1 Climate Change Stock to Consider Buying in This Age of Catastrophic Floods


On Aug. 26, Hurricane Ida slammed into Louisiana as a category 4 hurricane, destroying countless structures, killing more than a dozen people, and leaving more than 1 million homes and businesses without power in the Pelican State. 

While this is a tragedy, a hurricane making landfall on the U.S. Gulf Coast isn’t surprising. What is shocking is the unprecedented flooding Ida’s remnants caused in the heavily populated Northeast. Floodwaters shut down key transportation infrastructure in New York City, Philadelphia, and several other large cities, and killed at least 45 people in New York State and neighboring New Jersey. That’s about half of the 89 U.S. deaths being attributed to Ida, as of Sept. 7.

Scientists largely predict that climate change will continue to drive an increase in the frequency and severity of a wide range of weather events, including torrential rains and resultant flash flooding in certain areas. 

Several vehicles on a city road with high floodwaters.

ADS’ highway drainage products waiting to be installed at a jobsite. Image source: Advanced Drainage Systems.

A plastic recycling giant

Advanced Drainage touts that it’s the second-largest plastic recycler in North America, and over half of the plastic it purchases is recycled. Recycling isn’t just the responsible thing to do, it’s also smart business as the company is using its large-scale recycling capabilities to help drive down its raw material costs.

There is no type of plastic that’s completely innocuous relative to its impacts on both the environment and human health, in my view. But ADS isn’t involved in the type of plastics that are of higher concern, such as polyvinyl chloride (PVC) and plastics with the additive bisphenol A (BPA).  

Strong fiscal year 2021 performance

Advanced Drainage performed very well in fiscal 2021 (which ended March 31), despite the challenges caused by the pandemic. Revenue jumped 19% year over year to $1.98 billion. Growth was driven by strong demand in the U.S. residential and agriculture end markets.

Fiscal 2021 net income was $226.1 million, so ADS’ profit margin was 11.3%, which is very solid for an industrial company. Cash generated from operating activities surged 48% year over year to $452.2 million, and free cash flow jumped 57% to $373.5 million.

Stock and related financial stats

Company Market Cap P/E P/FCF Wall Street’s Projected 5-Year Annualized EPS Growth Year-to-Date 2021 Return 5-Year Return
Advanced Drainage Systems $8.3 billion 44.3 25.8 49.5% 40.8% 450%
S&P 500

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