Teresa Rivas, analyst for Barron’s, recommended Covanta Holdings…track her picks at:

http://trackthepros.com/categories.php?category_id=861

IT’S AN OLD ADAGE THAT one man’s trash is another man’s treasure, but these days, one man’s trash is another one’s electricity. Covanta Holding is at the forefront of the waste-to-energy industry.

With skyrocketing fuel prices, increasing worldwide concern over climate change and overflowing landfills, Covanta is positioned to see strong growth in both domestic and international markets.

It couldn’t come at a better time for the Fairfield, N.J.-based company, which owns landfills and energy generation plants, the majority of which are waste-to-energy facilities. Covanta incinerates garbage to produce electricity for towns and municipalities.

After paying off a number of capital-intensive plants, Covanta now owns debt-free assets, which, in addition to beefing up the bottom line, will increase its borrowing power. Combined with a 9% free cash flow yield, the company is free to pursue new projects and acquisitions.

Now may be the perfect time for investors to take the plunge. Despite 23.4% growth in the last year, Covanta shares are down 4.8% in the last three months, as stock sales by company Chairman Sam Zell, the real-estate mogul, have rattled investors.