Medical waste was already a booming business before COVID-19, but the surge in coronavirus cases may accelerate the situation. Much of the personal protection equipment (PPE) that healthcare workers use has to be thrown away as medical waste.

A Stratistics MRC report says that medical waste is expected to grow into an $18.9 billion market by 2024. U.S. hospitals alone produce more than 5 million tons of medical waste a year, according to Practice Greenhealth.

Stericycle (NASDAQ:SRCL), Waste Management (NYSE:WM), and Suez SA (OTC:SZEV.Y) are three of the bigger players that should benefit from that growth. While the overall business of medical waste may be down a bit over the past four months because many elective medical procedures have been postponed by the coronavirus-related shutdown, it's about to make a big jump again. As more people begin going back to their regular doctors and dentists, sterilization procedures are being increased and that likely means there will be more medical waste to dispose of.

Exterior of a hospital with a large sign.

Image source: Getty Images.

It's a complicated business. Unlike regular waste, much medical waste must be decontaminated using either an autoclave, which uses high-temperature pressurized steam, or through incineration. Federal and state regulations regarding medical waste mean that companies that dispose of it have to track that disposal as well.

Waste Management is the top of the heap

Waste Management, based in Houston, is the biggest waste management company in the country and is about to get bigger by acquiring Advanced Disposal Services (NYSE:ADSW). Waste Management owns 244 solid-waste landfills and five hazardous waste landfills and has contracts to collect residential and industrial trash. It also has a whole division dedicated to medical and pharmaceutical waste.

Last year, the company had revenue of $15.4 billion, a 3.6% improvement over 2018. Its first-quarter report shows that its business was hardly affected by the coronavirus because its diversity insulated it from shutdowns. You may have noticed that your trash collectors kept coming to your curb. In the first quarter, Waste Management reported revenue of $3.7 billion, up 7% over the same period year to year, and net income of $361 million, up 4% over the same quarter in 2019.

It may still be a good time to buy the stock. While it is up more than 14% over the past three months, it is down more than 7% year-to-date. The company also has a decent quarterly dividend of $0.545 per share, which it raised this year for the 17th consecutive year. The startup costs associated with waste management place a significant barrier to potential competitors, giving Waste Management a moat of protection -- especially from those companies that don't have 45,000 employees and five consecutive years of revenue growth.

Stericycle is riding a surge of sterilization

Stericycle, based in Lake Forest, Ill., is No. 4 in the U.S. waste-management space, and the bulk of its business is in medical waste. The company's share price is up more than 19% over the past year and 15% over the past three months.

Last year, the company reported that $2 billion -- well more than half of its $3.3 billion revenue for the year -- came from its regulated compliance waste services, which included medical and pharmaceutical waste services and compliance programs.

While most of the company's divisions were down in the first quarter because of the coronavirus pandemic, the regulated waste and compliance services sector did well. In the first-quarter earnings call, CEO Cindy Miller said the division had organic revenue growth of 3.3%.

Suez SA is more than just drinking water

Suez SA, based in France, is the largest private supplier of clean water in the world.

However, medical waste is also a big part of the company's business. Since the coronavirus broke out, Suez has played a more active part in the treatment of medical waste from COVID-19 in France, the Netherlands, and China. In France, the company has seven facilities equipped to treat biomedical waste.

Management noted that at one facility outside Paris, the amount of medical waste it has received has increased 50% during the coronavirus. In the Netherlands, Suez services processes the medical waste from 50 hospitals and healthcare companies and says it has seen a nearly 50% rise in waste during the pandemic, mostly from PPE that has been contaminated. In China, where the company operates a waste plant in Nangtong, Suez said it disposed more than 660 pounds of medical waste a day in February and March.

The company's share price is down more than 23% year to date but up more than 16% in the past three months. Organic revenue for the first quarter was up only slightly, 0.5%, because the pandemic negatively affected much of the company's business. However, its environmental tech and solutions segment, which includes medical waste, saw revenue rise 2.9%, year over year.

Taking the long view on all three

Even before COVID-19 hit, medical waste management was considered a growth trend because of aging populations and increases in medical procedures. All three of these companies appear to be solid choices for these reasons. 

The most secure bet of the three is probably Waste Management. Because of its sheer size, it has a economies of scale that the other two can't match, plus it is the only one of the three companies that offers a dividend. I also like Suez because its combination of water treatment and waste treatment will provide a lot of potential business for the company, particularly in developing nations. Stericycle is a more direct play in medical waste and it presents the most risk of the three, but also potentially the best upside over the coming year as elective surgeries begin to tick back up.