Garbage collection is an age old industry that is never pretty, unless you invest in it. As with many industries that are indispensable to society, waste management investors know that nearly every city in the world requires some sort of garbage collection. This is for hygienic reasons as well as maintaining a livable city for its citizens, so over the years these stocks have been steady performers. Waste Connections (NYSE:WCN) may not be the first company you think of in this sector, but it operates in most major cities across the United States and Canada. It offers residential and commercial waste removal, as well as solid and liquid waste disposal, oilfield waste treatment and recovery, and movement of waste cargo and containers. Learn More
The Bearish Case: Similar to the industry leader Waste Management (NYSE:WM), Waste Connections is somewhat limited by being a strictly North American company. Waste Management itself is a hindrance to Waste Connections, as it remains the top dog in North America along with Republic Services (NYSE:RSG). While the industry is concentrated, it is also top-heavy, which makes it difficult for Waste Connections to ever surpass the top dogs in terms of market share. While its price to sales is solid, Waste Connections trades at an inflated price to earnings ratio of 150, which fundamental analysts would say means the stock is overpriced. The balance sheet also carries a hefty amount of debt, although that seems to be normal in this industry.
Sebastian Seiler