Should You Invest in Waste Connections?

OVERVIEW

Waste Connections Incorporation is a company based in the United States which offers waste solutions to customers in the United States and Canada. It offers waste collection services to residential, commercial, and industrial customers. They operate landfills, transfer stations, and recycling centers across the country. They also offer waste solutions to the oil and natural gas industry and they operate intermodal routes to transport waste.

Why You Should?

  1. Waste Connections will see higher volumes of waste across all of its sectors as the economy returns to full strength after bottoming out earlier this year due to the COVID-19 Pandemic. This will benefit the company’s results in the future.
  2. Waste Connections is a very safe and recession-proof investment. This is because the products and services that it offers are essential for a smooth-running economy and a high quality of life. There will always be some demand for its services which will benefit the company during a time of economic downturn.
  3. The cost of recycling has dropped in part due to the trade tensions caused by the current administration with China, the world’s largest importer of recyclables like paper and plastic. This will benefit the company’s results if they can capitalize on a trade deal with China.
  4. Waste Connections has seen rising revenues and profits over the past couple of financial years due to the factors mentioned above as well as the slow and steady growth of the solid waste industry. This will benefit the company’s future growth. In the financial year of 2019, the company reported revenues of around 5.4 billion and profits of around 567 million. Both of these metrics are lower than what the company reported in the financial year of 2018 when they had revenues of around 5 billion and profits of around 547 million.

Why You Should Not?

  1. Waste Connections faces tough competition from companies like Waste Management, Republic Services, and GFL Environmental as well as other publicly provided waste solutions. Though they sign contracts with cities for their services, these contracts can quickly be given away to these competitive companies.
  2. The COVID-19 Pandemic has decreased the demand for Waste Connections commercial and industrial waste solutions as schools and other large locations close down. Waste Connections also has seen a drop in demand for waste solutions offered to the oil and natural gas industry. The company expects these impacts to be short to mid-term.

MY OPINION

In my opinion, I think that Waste Connections is a great long-term investment due to the essential nature of the services that it provides. A stronger economy, a resolution of trade issues, as well as rising revenues and profits will further aid the company. However, competition and the impacts of the COVID-19 Pandemic might negatively impact the company.

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Aaditya Patel

Aaditya Patel

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.