Don't Throw These Out with the Trash: Garbage Stocks

It’s a dirty job but somebody’s got to do it. The garbage collection business has a big advantage over most other businesses: it's all monopolies.

Average homeowners aren’t given a choice of waste collection companies; they either deal with the one that has contracted with their city or take their trash to the dump themselves.

The way these companies grow is by raising rates, which they negotiate with the cities, and by acquisitions of either publicly traded companies or small private companies. For example, Waste Industries USA Inc. (WWIN) has made over 100 acquisitions over the last 16 years.

Metrics used to analyze these stocks include the usual revenues and earnings. Here is a list of the larger publicly traded companies in the waste management business, sorted in order of highest to lowest quarterly revenue growth year over year.
Abbreviations: P/E=Price Earnings Ratio, P/S=Price Sales Ratio, QRG=Quarterly Revenue Growth Year over Year

WCA Waste Corporation (WCAA) P/E 77, P/S .9, QRG 32.9%

Waste Connections Inc. (WCN) P/E 27, P/S 2.5, QRG 11.8%

Waste Services Inc. (WSII) P/E N/A, P/S .96, QRG 11.0%

Casella Waste Systems, Inc. (CWST) P/E 118, P/S .6, QRG 8.1%

Waste Industries USA Inc. [WWIN] P/E 20, P/S 1, QRG 4.1%

Republic Services Inc. (RSG) P/E 21, P/S 1.8, QRG 3.8%

Allied Waste Industries Inc. (AW) P/E 40, P/S .8, QRG, 1.8%

Waste Management, Inc. (WMI) P/E 16, P/S 1.4, QRG -2.6%

Disclosure: Author owns WSII.