Should You Invest in Waste Connections?

OVERVIEW

Waste Connections Incorporation is a company based in Canada. The company offers solid waste services to individuals, companies, and governments across Canada and the United States. The company operates over 300 collection operations, 132 transfer stations, and 57 landfills, among other facilities. The company was founded in 1997.

Why You Should?

  1. Waste Connections is a great reopening play in an investor’s portfolio. The company saw a drop in demand for commercial trash collection as large venues like restaurants and sporting events shut down. however, once the pandemic is over, the company will see strong demand for solid waste services return. This will benefit investors.
  2. Waste Connections operates 68 recycling operations across its markets. In 2018, as China stopped importing recycling materials from countries like Canada and the United States, the price of plastics and paper tanked. However, in recent years, many of these materials have been processed domestically, boosting the prices and demand for these recycling commodities.
  3. Waste Connections is a safe investment option in an investor’s portfolio due to the essential nature of the services that it offers. Individuals, companies, and governments will continue to spend on critical utilities like solid waste services in order to maintain a high quality of life. This will benefit the company and its investors in the future.
  4. Unlike its competitors, Waste Connections has a lot of exposure to the oil and natural gas industry as it offers solid waste services to manage waste coming from the oil and natural gas industry. Though oil is not a good long-term energy investment, the short-term boom in demand for oil will continue as people go back out. This will boost the demand for waste services.
  5. Waste Connections, like every other solid waste service provider, has some localized dominance and monopolies by signing long-term contracts with cities and governments. This localized dominance and monopoly will shut down any competition in the area, something that will benefit Waste Connections.

Why You Should Not?

  1. The company faces tough competition in the solid waste industry. Some of these competitors include Waste Management, Republic Services, and other publicly owned and operated waste operations. This competition might hurt the company and its investors in the future.
  2. I think that Waste Management and Republic Services are better solid waste service investments than Waste Connections. This is because of the Waste Managements scale (the largest waste company in North America), and Republic Services’ domestic exposure in the United States. However, Waste Connections is not necessarily a bad investment option.

MY OPINION

I think that Waste Connections is a good long-term investment due to its position as a good reopening play, a safe investment option, a strengthening recycling business, its oil and natural gas business, as well as localized dominance. However, tough competition and better investments in the solid waste industry might hurt the company and its investors in the future.

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Aaditya Patel

Aaditya Patel

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