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Five analysts and top management from eleven sector firms examine the environmental services sector in this special 65-page Environmental Services issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info460.htm.

TWST: Let’s begin with the approach that each of you takes to investing in environmental services and the segments within the industry that you focus on most closely. Jaimi, may we start with you?

Ms. Goodfriend: We look for consistent performers that generate cash. We primarily look at the environmental infrastructure/solid waste and water filtration stocks, with a few additional companies that serve other environmental niches.

TWST: Jaimi, is this a better-than-average place to be in a recession?

Ms. Goodfriend: Absolutely. You have consistency and historical durability with these companies that is not there in many other industries. We do remind investors, however, that this industry is recession-resistant, not recession-proof, so while this is a better-than-average place to be, it is not a completely safe haven.

TWST: Jaimi, what is happening to pricing for the companies that you follow?

Ms. Goodfriend: We have seen softer pricing in the rolloff segment, as was mentioned, and also in various areas of the country where the recession has taken a toll on employment. For example, areas in the Pacific Northwest and the Midwest that are reporting higher unemployment numbers have seen reduced demand for solid waste services, and some softness in pricing as a result. We have also seen some providers of water filtration applications encounter price competition in some smaller geographies around the Midwest and southern United States. New project contracts coming up seem to be bidding a little more competitively than they were a year ago.

TWST: Jaimi, which stocks do you think investors should buy today?

Ms. Goodfriend: We focus today on companies that have end markets that are a bit more cyclical and product mixes that are weighted toward consumables — replaceable cartridges, for example. With respect to the solid waste companies, we like Allied Waste on a valuation basis. I do think there is execution risk associated with Allied (NYSE:AW). Once they have more managers in the field, we recognize there may be some market development work to be done that was deferred when the company operated with an exceptionally lean infrastructure. That said, the upside potential with Allied should be attractive once things get smoothed out, due to its leverage.

TWST: Jaimi, let’s go back to you. What is your sense of the investor sentiment surrounding this sector today?

Ms. Goodfriend: I think there was a bit of surprise about the degree to which recessionary pressures hampered operational performance, although we think most investors understood the solid waste companies would exhibit some sensitivity to lower industrial production. Still, the negative impact on price and, more specifically, on volume may have exceeded expectations this year. I think right now we’re seeing people move more toward cyclical names and away from solid waste names that tend to lag behind the early cyclical downturns. We see this more with the solid waste companies that are more heavily weighted toward C&D volumes.

1) Environmental Services - In an in-depth (10,300 words) Analyst Roundtable, Stacy Gray Devine, Director at Deutsche Banc Alex. Brown, Richard Eastman, Managing Director at Robert W. Baird & Company, William Genco, First Vice President at Merrill Lynch Global Securities, Jami Goodfriend, Analyst that specializes in research and investment in environmental/infrastructure systems at First Analysis Corporation and Alan Pavese, Research Analyst at Credit Suisse First Boston, examine the outlook for the sector including industry segment, investment approach and share specific stock recommendations.

2) The TWST confidential Off-The-Record survey of management performance at seven sector firms asked market insiders about the ability of management teams to create shareholder value.

3) CEO interviews (average 2,500 words). Top management of eleven sector firms examine the outlook for their firm and the sector.