Australia Markets closed

The Bingo Industries share price hit a 52-week high this week. Is it a buy?

Jack Kaminski
share price higher

The Bingo Industries Limited (ASX: BIN) share price opened at $3.05 this morning after hitting a 52-week high of $3.10 on Tuesday.

It was a bumpy ride in 2019 for Bingo’s share price, which hit a 52-week low of $1.17 on 18 February 2019 but still managed to finish the year up 60% at $2.84.

So, if Bingo’s share price fell by 43% in early 2019 to then finish 60% higher by year’s end, is it still a sound investment? Let’s dig deeper.

FY20 market update

At its annual general meeting on 13 November, Bingo updated the market on its activities and guidance for the coming financial year. Bingo announced that it expects earnings before interest, tax, depreciation and amortisation (EBITDA) in FY20 to range from $159–164 million. This equates to a 50% increase on FY19.

The market responded well to this guidance, with Bingo’s share price lifting 10.6% the day after the announcement and it has not fallen past this level since.

In 2019, Bingo also sold a non-core business asset which is excluded in the expected EBITDA figure for FY20. The Banksmeadow Facility sold for $50 million and was finalised in late September. Other non-core assets will also be sold before FY20 is over, amounting to another $30 million.

Support from the regulatory framework

The recycling network within New South Wales received a regulatory update in 2019 that positively affects Bingo. Waste management companies were carting waste from Sydney across the border into Queensland due to the New South Wales landfill levy. This levy was more expensive than the cost of shipping waste to Queensland.

However, after June 2019 it became illegal to do so and waste companies are now required to dump at facilities within the state. Bingo owns several dumping facilities throughout New South Wales, which places it in prime position to profit from these regulatory changes.

Continued growth throughout the eastern border of Australia

Bingo Industries is currently only operating within New South Wales and Victoria and is far from maturity within these markets. To support its current network, Bingo is planning to expand into the Queensland market in the medium term. This will solidify Bingo as a heavyweight in waste management across the whole eastern border of Australia.

Several facilities are also undergoing license upgrades, which will allow Bingo to expand its operations and process a more diverse range of waste products on site.

Foolish takeaway

Bingo Industries is working hard to secure its place within the waste management network in Australia. Its current operations are being expanded upon and new facilities are in the pipeline for 2020 and beyond.

The urbanisation of the Australian east coast is creating higher demand for proper waste management, and the recent reforms in state legislature favours the position of Bingo within the waste management network.

With all this in mind, I think the Bingo Industries share price is a buy. Happy Bidding!

The post The Bingo Industries share price hit a 52-week high this week. Is it a buy? appeared first on Motley Fool Australia.

If you're not sold on Bingo, why not consider these top dividend picks instead.

Top 3 Dividend Shares To Buy For 2020

When Edward Vesely -- our resident dividend expert -- has a stock tip, it can pay to listen. With huge winners like Dicker Data (up 126%) and Collins Food (up 79%) under his belt, Edward is building an enviable following amongst investors that are planning for retirement.

In a brand new report, Edward has just revealed what he believes are the 3 best dividend stocks for income-hungry investors to buy now. All 3 stocks are paying growing fully franked dividends giving you the opportunity to combine capital appreciation with attractive dividend yields.

Best of all, Edward’s “Top 3 Dividend Shares To Buy For 2020” report is totally free to all Motley Fool readers.

Click here now to access this free report.

More reading

Motley Fool contributor Jack Kaminski has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020