Should You Invest in Waste Management?

PHOTO CREDIT: Waste Management

OVERVIEW

Waste Management Incorporation is a company based in the United States. The company offers solid waste management services to customers in the United States and Canada. The company operates a fleet of trucks to collect trash from residential, commercial, and industrial customers. They also operate hundreds of landfills, recycling centers, MRFs. The company was founded in 1987.

Why You Should?

  1. Waste Management is a great reopening play in an investor’s portfolio. The pandemic reduced the demand for the company’s commercial and industrial services as people stayed indoors and as businesses saw a drop in demand. However, once the pandemic is over, waste volumes will surge once again.
  2. Waste Management is a safe investment option in an investor’s portfolio due to the essential nature of the services that the company provides. Regardless of the economic times, people will always create trash which companies like Waste management need to process. This will help the company have stable sales during economic downturns.
  3. A Biden administration will benefit the company. From massive trade deals with allies (which will cause an increase in the prices of recycling commodities) and large infrastructure projects (will increase industrial waste volumes), Waste Management is poised for strong growth over the next 4 years. This will also benefit investors.
  4. Waste Management will benefit from a booming housing market. As more houses are built or remodeled, there will be a rise in waste volumes coming from industrial companies. This rise in industrial volumes will benefit the company and help Wate Management report better numbers. This will also benefit investors in the company.

Why You Should Not?

  1. The company faces tough competition in the waste industry. Some of these competitors include Republic Services, Waste Connections, and other public (government-owned and operated) waste companies. This competition might hurt the company and its investors.
  2. The COVID-19 pandemic has negatively impacted the company. The company saw a drop in commercial and industrial volumes because businesses had to shut down or delay any construction/other projects. The company will hurt the company and its investors until the markets that the company operates in are fully reopened.
  3. The waste industry is a safe investment option but is slow-growing (with growth in the single-digit percentages over the past couple of years). Slow growth is caused by limited price increases as well as slow-growing waste volumes. If you are looking for a high-flying stock, don’t invest in Waste Management.

MY OPINION

I think that Waste Management is a great long-term investment due to its position as a good reopening play, its position as a safe investment option, the positive impacts from a Biden administration, as well as a booming housing market. However, tough competition, negative impacts from the pandemic, as well as its part in a slowly growing industry might hurt the company and its investors.

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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.

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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.

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