Waste management might be a dirty business to some. But for investors looking to buy into an industry with steady returns and low volatility, trash stocks can be a treasure. What are some of the best waste management stocks to buy now, you ask? Well, take a look below and see whether any of our picks are worth recycling your cash into.
Best Waste Management Stocks
Waste Management, Inc. (NYSE: WM)
Bearing the name of the industry fits WM well as the company is one of the best-recognized companies in waste management.
WM is a leading provider of waste management environmental services such as garbage collection and disposal, recycling, and dumpster rental.
In addition to offering waste collection services for commercial and residential properties, the company also offers roll-off dumpster rentals.
Roll-off dumpers are large and tend to be used for cleaning out major renovations and larger projects.
The high market share of WM gives it a competitive advantage in the industry.
Nearly 30% of all landfill volume in the United States is managed by them. Making it one of the most prominent waste management players in the US.
Sustainability and environmental stewardship are of the utmost importance for the waste collection leader, as shown in its ESG rating.
WM scored an 8.2 on its environmental risk score which has helped boost its ESG score of 17.
However, the company scored poorly on governance (3.3), contributing to the lower overall rating.
By focusing on sustainability, their efforts in environmental stewardship could help them thrive in the future.
Government policies might benefit the sector in the future and companies that invest in sustainability could benefit the most.
The company’s dividend is another reason to be excited about this stock. WM pays a dividend yield of 1.85%, a payout that the company has increased for over 19 consecutive years.
Overall, Waste Management stock has performed exceptionally well.
Shares of Waste Management have been able to hold on tight to the top of its long-trend channel. It is surprising to see this kind of performance considering most stocks have lost significant value in recent months.
Despite its overall strength during the past year, the company fell short of expectations in the final quarter of 2022.
WM missed its earnings-per-share (EPS) forecast but did have a 26% YoY increase in revenue.
However, falling short of expectations didn’t seem to bother investors as company shares barely budged after the earnings report.
The forgiving response is likely due to a combination of investor confidence in the future and its YoY growth in revenue.
Investors’ confidence is staggering considering the $62 billion market cap giant trades at a P/E ratio of 28x—not the cheapest valuation out there.
Casella Waste Systems (NASDAQ: CWST)
CWST is a solid waste collection company offering resource management services in the United States.
Among other things, Casella focuses on collection, disposal, transfer, and recycling services.
The company services about 150,000 business, residential, and municipal customers across 40 states.
However, its core operations are located in Massachusetts, Maine, New Hampshire, New York, Vermont, and Pennsylvania.
Although the company does not pay dividends, its EPS growth could be a compelling reason to buy into it.
The waste management company has grown its EPS by 15% each year over the past three years.
But the company missed EPS by nearly 25% in the fourth quarter of 2022, breaking the spell. However, despite the EPS miss, investors held their position and the company avoided a sellout.
The company’s circumstances are similar to WM’s, where perhaps investors are overly confident about long-term returns.
Past performance is not indicative of future success. If CWST can recover or grow its EPS, shareholders could have brighter days ahead.
Another compelling reason to love CWST is its share-price performance. As with the rest of the industry, this stock has held its value extremely well over the long run.
Its performance is certainly something to be envied.
Since its 2008 bottom, the company has delivered close to 13,000% returns for investors. Yes, that’s not a typo and you read it well.
Five-figure returns since the great recession—not bad for a garbage processor.
Waste Connections Inc (NYSE: WCN)
WCN is a company that provides garbage pickup and dumpster rental services to businesses in the US and Canada. The company has a market cap of nearly $35 billion and offers a dividend of 0.75%.
Since its IPO in 2009, WCN has returned close to 1400% for investors in addition to its dividend payout.
WCN stock did better than a large part of the market in 2022. However, the share price has been consolidating since November 2021.
The tight multi-month consolidation is approaching the bottom of its long-term trendline.
This could be a solid technical indicator that the consolidation period is over and that shares could move upward.
But technical details never offer a full picture. To make an educated guess, investors should also look at the company’s financials.
So how did WCN do when compared with its competitors?
With an 8.1% revenue growth rate over the past three years, Waste Connections has built a strong track record of growth.
Fourth-quarter earnings beat consensus estimates by $0.01 per share.
The other two companies on this list missed consensus in the same quarter, making this outcome all the more impressive.
WCN has surpassed consensus EPS estimates three times over the past four quarters.
The waste management company also beat revenue YoY by reporting $1.87 billion in the fourth quarter. This represents a big jump from the same quarter last year when the business reported $1.62 billion.
Despite its performance and technical positioning investors should still exercise caution. The company’s P/E ratio might be overextended with shares trading at 42 multiples of its earnings value.
WCN’s price and financial performance make it an attractive investment opportunity for those seeking exposure to the waste management industry.
Are Waste Management Stocks a Good Investment?
Stocks from waste management companies could offer an excellent long-term investment and dividend income opportunity to add to your portfolio.
Waste management is an integral part of urban development.
Maintaining it is a matter of public health and environmental sustainability. Investing in companies in this industry is therefore a win-win for investors looking for returns and sustainability.
There are numerous reasons why investors could expect their waste management investment to grow in the long term.
For one thing, a growing global population will likely generate more waste in the future.
In fact, the World Bank predicts that global waste generation will increase from 2.01 billion tonnes in 2016 to 3.4 billion tonnes by 2050.
When it comes to waste, America leads the way as the world’s largest waste producer per capita. Supporting the growing need for waste management services in the country.
Trash collection and waste management are essential services that could do well regardless of the broader economic environment.
Take for example the VanEck Environmental Services ETF (EVX)—an exchange-traded fund that tracks waste management companies, environmental companies, and other industrial services.
The fund has had a solid performance with over 400% returns since 2008. Currently, it finds itself just 9% shy of its all-time high.
It shows that despite the recent poor performance of the market, waste management remains a strong sector.
Waste management also has a significant role to play in how we manage our resources.
There is an increasing focus on sustainability and green initiatives being popularized globally that the industry could benefit from.
An example of this is the Circular Economy Package. An initiative by the European Union aims to increase the recycling rate of municipal waste to 65% by 2035.
Investing in waste management stocks that innovate to reduce their carbon footprint could have a better chance of success in the long term.
Now that you know more about waste management stocks you might want to add one (or more) to your portfolio.
FAQs
Is Waste Management a Good Stock to Buy?
WM is a good stock to consider in the waste management industry and a leading player in the United States. The company manages nearly 30% of all American landfill volume. It also has had a compelling performance since the last recession.
What Is The Top Waste Management ETF?
VanEck Environmental Services ETF (EVX) is the top waste ETF in the market which seeks to track the NYSE Arca Environmental Services Index (AXENV). The exchange-traded fund comprises companies that deal with recycling and garbage disposal. The ETF has a ten-year average performance return of 11.19%.
How Can I Invest In Waste Disposal?
The easiest way to invest in waste disposal is by purchasing shares of waste disposal companies. There are also exchange-traded funds (ETFs) available that are composed of companies in the garbage disposal industry. It’s always a good idea to do thorough research before making any investments.
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