GFL Stock Rose 24% Last Month: Is It Still a Buy in July?

GFL stock (TSX:GFL) exploded by 24% in June, but is the growth now over for July? Or can investors still get in on the action?

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There has been a lot of attention on growth stocks in the tech sector as of late. Well, as of the last year, really. And this attention can cause even some of the best growth stocks out there to fall under the radar.

Such was the case for GFL Environmental (TSX:GFL), with shares surging 24% in June alone. So, what happened? And is GFL stock still a buy in July?

What happened

First, let’s go over what happened with GFL stock in the first place. GFL stock saw a significant 24% rise in June 2024 due to several key developments. Firstly, the waste management solutions provider announced a substantial $500 million senior notes offering, aimed at managing and extending its debt, which boosted investor confidence. 

Additionally, the company has been involved in several strategic acquisitions and divestitures, enhancing its operational efficiency and market position. GFL stock also increased its quarterly dividend by 10%, which is an attractive proposition for income-focused investors.

Furthermore, there has been speculation about potential buyout interest, which further fuelled the stock’s rise. Analysts from BMO suggested that a takeover by a consortium could be likely, adding to the positive sentiment around the stock. These factors combined to drive the notable increase in GFL’s share price in June.

Into earnings

That’s all well and good, but how has GFL stock been performing lately to support all this future growth? During its most recent earnings report, GFL stock reported its Q1 2024 earnings with revenues of $1.8 billion, which was flat compared to Q1 2023. 

The net loss for the quarter was $172.8 million, narrowing by 29% from the previous year. The loss per share improved to $0.46 from the previous year. The company attributed the performance to strong growth in its solid waste segment, bolstered by recent strategic acquisitions and effective cost management.

And overall, there has been strong momentum from GFL stock. Revenue in the third quarter of 2023 was $1.96 billion, slightly up from Q2 2023, driven by sustained performance in solid waste management and environmental services. This increased to $2 billion by the fourth quarter, dropping back slightly to $1.8 billion by the first quarter.

Before you buy

There are certainly enough reasons to consider buying GFL stock right now. However, investors should always be cautious. Especially after a massive share price increase. GFL has shown consistent revenue growth and improved net losses over recent quarters. The company’s ability to maintain and increase its Adjusted EBITDA reflects strong operational performance and effective cost management strategies.

Plus, GFL stock is active in strategic acquisitions and divestitures, which have enhanced its market position and operational efficiency. These transactions are crucial for long-term growth and profitability but also come with integration risks.

Furthermore, GFL is the fourth-largest diversified environmental services company in North America, providing a comprehensive line of solid waste management, liquid waste management, and soil remediation services. This strong market position offers a competitive advantage. And now with a massive dividend increase of 10%, it certainly is looking quite healthy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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