One of the chosen industries for our team this week was electronic goods recycling. The mega-trend growth for electronic goods is relatively constant due to the increasing demand and regulation requirements in the United States. Since the demand for electronic goods recycling is based on both federal and state laws due to environmental health concerns of the poor disposal of batteries and electronic equipment, the industry is here to stay.
The industry has low volatility because it operates in both the commercial and consumer space. In certain scenarios where the economy takes a dip the revenue growth stays constant because electronic products still have to be disposed of even if they don’t sell. With this also in mind, when we compare times when disposable income is high, consumers have an increased demand for new electronic goods, which means their old ones have to be disposed of. Electronic goods manufacturers likewise will increase production thereby increasing the flow of more electronics that need to be disposed of in an environmentally friendly way.
Although this industry doesn’t have any contractually recurring revenue, each state has their own quota for a certain amount of electronics products that have to be safely disposed of. Since there are a limited number of operating electronic recycling centers throughout the United States, it’s possible to estimate the minimum amount of expected revenue you’ll receive throughout the year. Each state and county has their own quota, with some higher than others ( i.e California and New York).
Another possible revenue stream through this industry is the reselling of rare metals you’re able to retrieve. Each year the price of essential rare metals needed for the production of electronic goods are increasing. In the near future for commercial electronic companies, it may be more economically viable to retrieve and recycle old equipment for the main purpose of reducing material expenses.