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What is one constant factor of nearly every country in the world, regardless of socioeconomic standing? Everyone makes trash! Waste Management (NYSE: WM) is a 53-year old company founded in Chicago, Illinois but based out of Houston, Texas, and is one of the North American leaders in the appropriate industry of waste management. The company primarily serves large urban markets in Canada, the United States, and Puerto Rico, and has ownership of nearly half of the garbage collection on the continent. Learn more
Waste Management is becoming known as a blue-chip stock on Wall Street with a solid dividend yield of 1.78% and a market cap of just under $55 billion USD. Unlike other consumer companies, Waste Management did not see much of a downturn to its stock performance during the COVID-19 pandemic, as waste removal and sanitation services were actually more in demand than ever as public hygiene and cleanliness became the focus for especially hard hit regions of the United States and Canada. Shares of Waste Management have a 50-day moving average of $118.61 and a 200-day moving average of $116.52 at the time of this writing, which illustrates just how rock steady and solid this stock can be.

The Bullish Case: There are few industries with wider economic moats than garbage collection and waste management, as the North American sector is dominated by Waste Management and its chief rival Republic Services, INC. With a network of 346 transfer stations, 293 landfill disposal sites, 146 recycling facilities, six power production plants, and a fleet of over 26,000 collection vehicles, Waste Management has the infrastructure to remain an industry leader for decades to come. But Waste Management is not strictly a garbage collection company either. With branches in hazardous material removal, security services, dumpster and portable toilet rental services for construction sites, Waste Management is working towards becoming a total industrial conglomerate. The company has also shifted much of its focus to recycling and sustainability, which definitely ties in hand in hand with the new Biden administration’s shift to green energy and creating a country that is drastically reducing its carbon emissions.

The Bearish Case: As steady as Waste Management is, there are always new companies and innovative technology coming down the pipeline. Newly public company Danimer Scientific (NYSE:DNMR) is a Georgia-based company that is changing the way we look at biodegradable and sustainable ways to recycle waste and turn them into reusable products. Is it a threat to Waste Management? Not necessarily, but innovative companies like this can disrupt long-standing industries and change the way we think about waste management. Waste Management also shows no signs of expanding beyond North America, which means the upside to its business growth, as well as its stock, may be capped. 

Final Verdict on Waste Management: This isn’t a growth stock that you can expect exponential growth from at this point in its business cycle. At the same time, any new innovation or expansion, and a market cap of $50 billion can easily become a ten-bagger to $500 billion in a heavily saturated market with little competition. Waste Management is a stock that you can buy and hold forever, collecting dividends, and knowing full well that a segment of your portfolio is safe and secure.

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