One of the weakest sectors in this current market environment is most clearly the industrial sector. It is a sector that benefits from economic prosperity and booming markets to fuel growth. As rational investors know the key to eliminating unsystematic risk is diversification, and that is why it is key to still have an industrial stock in your portfolio. There is a industrial stock that benefits from one of the most stable sectors in this environment. That slowing markets and a global infrastructure slowdown can’t hold this company back from prospering. I’m talking about Stericycle (SRCL: 53.23, 0.00 (0.00%)): a healthcare company hidden deep within the industrial sector.

Stericycle is a medical waste services company that provides bio-hazardous medical waste disposal and infection control services for medical care facilities. They serve over 400,000 customers including: hospitals, blood banks, pharmaceutical manufacturers, out-patient clinics, acute care facilities as well as many others. They also operate not only in the United States but in Canada, Mexico, Argentina, Ireland and the United Kingdom. They operate within four business segments:

• Domestic Medical Waste Management: Collection and transportation comprise this segment. Collection involves providing clients with reusable leak and puncture resistant containers for collecting hazardous bio-waste. Transportation involves collection of provided contains for proper disposal.
• Domestic Pharmaceutical Returns: Stericycle picks up or receives shipments of excess pharmaceutical drugs from retail pharmacies in the United States.
• Foreign Medical Waste Management: Stericycle has set up national waste management facilities in foreign countries where they take the bio-waste and dispose of it.
• Foreign Equipment and Technical Licensing: This segment is in charge of training and licensing in accordance with foreign government regulations.

Market Stability

Regardless of what is going on in the economy, there will continue to be medical waste that must be disposed. It is inevitable that hospitals will continue to run, and thus bio-waste will need taken managed. Aside from the obvious, Stericycle also has a very stable contract base. They engage in fixed free arrangements, which account for nearly half of the revenue base. They also engage in lengthy contracts, with the domestic contracts averaging 3-5 years and the international contracts averaging 3-15 years with the lengthier ones being in the United Kingdom. As if that is not enough stability, Stericycle maintain a 95% revenue retention rate.