(FORTUNE Magazine) – Credit Rio. The recent United Nations Earth Summit in the city of the samba has investors eyeing stocks in environmental businesses. Long touted as recession-proof, these stocks wilted during the recent slowdown, and many folks dump the notion of buying them like so much toxic waste. But they are worth another look. The Environmental Protection Agency estimates that Americans spent $121 billion on environmental services last year. That is more than the $80 billion recorded in new car sales that year. Over the next five years revenues for services like environmental engineering < and hazardous waste cleanup will grow at least 20% annually, according to Farkas Berkowitz & Co., a consulting firm in Washington, D.C. Says Marc Sulam, an analyst at Kidder Peabody: ''There is plenty of opportunity for investors.'' One well-known outfit, Waste Management, the giant Oak Brook, Illinois, waste disposal company, looks cheap right now. Historically, Waste Management has sold at a 40% to 80% premium to the market. But Robert Miner, an analyst at Paine Webber, estimates that the company's price/earnings ratio, based on estimated 1992 earnings, works out to 19. That's hardly the bargain basement, but it does put the stock at a slight discount to the S&P 400, which Miner reckons is selling for about 21 times 1992 earnings. Says he: ''The stock hasn't been this cheap for years.'' The green movement is surging outside the U.S. Investors looking for a good way to cash in on that momentum should check out Waste Management International PLC, which just began trading separately from its parent in April. Waste Management's expat offspring, which is based in Britain, cleans up throughout Europe, the Middle East, the Pacific Rim, and South America. The subsidiary, which can be bought through American Depositary Receipts, raised revenues a blooming 32% and pre-tax income 55% last year. As new EPA regulations force many outmoded landfills to close down over the next three years, the ''tipping fees'' that remaining dump owners collect should rise. That spells extra cash in trash for Mid-American Waste Systems, a garbage hauler based in Canal Winchester, Ohio, with $119 million in revenues last year. Mid-American dumps about 60% of the waste it collects into landfills it owns, so it pockets the fees. Vishnu Swarup, analyst for Prudential Securities, expects earnings to grow 20% to 25% a year. At Harding Associates, a small environmental consulting and engineering firm in Novato, California, earnings quit growing last year, a victim of the faltering California economy. Sulam says Harding is now regaining steam. The company is diversifying away from California and has revamped its marketing operations. Result: Earnings are on the rise, and backlogs are running 30% above last year's. Sulam expects to see a 30% gain in operating earnings for the fiscal year ended in May and another 25% in fiscal 1993. Brand Cos., of Westchester, Illinois, which specializes in cleaning up asbestos, has also diversified. Chemical Waste Management, which is 76% owned by Waste Management, has built up a 54% stake in Brand's stock. Chemical Waste brought in its own people to help refocus Brand on its industrial business, expanding services into scaffolding, hydroblasting, dismantling, and demolition. Last year Brand trimmed costs, and this year Jim McDonald, an environmental services analyst for the Chicago Corp. brokerage, expects the company to report earnings of about $1.20 a share for fiscal 1992, up from 93 cents. A coal pit would seem the last place to look for a green stock. But Frank Korth, portfolio manager for Kemper's Environmental Services fund, likes the large tracts of low-sulfur coal owned by Ashland Coal. The closer we draw to January 1, 1995, when new toxic-emission standards will further limit the use of high-sulfur coal, the better Ashland's huge store of the low-sulfur variety looks. Ashland's management feels much the same way: It recently completed an acquisition of low-sulfur deposits that will raise its annual production by 4.8 million tons, or 35%.

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