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Consolidations in the environmental industry between 1992 and 1997 have caused mixed results for investors interested in this sector. Companies that have achieved leading positions in technology and operating efficiencies in the water treatment market and the environmental remediation market could prove to be wise investments.

Profit declines for landfill operations, waste hauling, and recycling have made environmental industry stocks volatile for the first six months of 1996. However, there is demand for water purification services, especially from the food, drug, and semiconductor industries, and the Environmental Protection Agency is also contracting for remediation work. Some stocks in this industry are timely for 1996, and investors should seek shares of the leading companies.

Potential investors in the environmental services industry should examine individual stocks for timely choices. Different segments of the industry are experiencing different conditions, with many of the waste hauling companies hurt by declining profits, and smaller companies in the hazardous waste treatment industry profiting from the rapid consolidation of the industry. Ionics is well positioned out to 2001 in the expanding water purification service segment.

Price drops for corrugated cardboard and old newspaper have hurt earnings for waste-haulers in the 4th qtr of 1995. They will benefit in 1996 from EPA waste-volume and landfill regulations, as well as from a growing economy, however. Demand has increased for water purification due to ultrapure water requirements in the food and other industries, but remedial services may not do well. Investors must select timely leaders among these stocks.

Stocks of the environmental industry are rising due to good revenues and earnings since 1994. Acquisitions, restructuring, and price relief are also benefitting results. Higher recycled paper prices are aiding the recycling sector, new operational requirements are bolstering landfills, and water treatment is in demand. Investors need to select timely stocks that have gained operating efficiency and technological leadership.