Performance Review For 5 Waste Management Companies

Includes: CWST, RSG, WCN, WM
by: Zvi Bar

Garbage is in many ways a quasi-commodity, made of bits and pieces of several commodities. Before record oil prices made it profitable to squeeze every possible drop out of the Canadian sands, that land was looked at as garbage. Now, in many places, it is common for people to scavenge for pieces of junk metal or even old computer components for the minimal amount of valuable metals inside. Indeed, one person's trash is another person's treasure.

Moreover, it is believed that between 5% and 10% of global oil production is distilled and made into plastics. Due to the high (and growing) plastic content of garbage and the general ease in recycling plastics, trash also an ideal source for the raw materials required to make more plastic products.

Additionally, aluminum, is rather commodity abundant in consumer products and garbage, and a commonly recycled resource. As the value of oil and aluminum increases, among other commodities common to trash, the depths to which trash shall be filtered will only increase.

Beyond the high global demand for commodities and their increasing prices, newer green initiatives also appear likely to support the recycling industry. Businesses, municipalities and even residences may either opt to or be required to initiate more ecologically friendly waste practices as time goes on.

All of this appears likely to benefit the companies that collect, sort and maintain trash. Many of the publicly traded companies in this business are of significant size, and tend to acquire smaller businesses that identify new trash opportunities. The industry is also beloved for generally having strong cash-flows and dividends.

Below, I have listed the present yield and recent performance rates for five publicly traded waste companies that have strong prospects for future growth: Casella Waste Systems Inc. (CWST), Progressive Waste Solutions Ltd. (BIN), Republic Services, Inc. (RSG), Waste Connections Inc. (WCN) and Waste Management, Inc. (WM).

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BIN has appreciated approximately 115% since its IPO in mid 2009, but it has been range bound since mid 2010. BIN raised its quarterly dividend from $0.125 to $0.14 this past quarter, after maintaining the prior rate since its IPO. Last quarter, WM raised its quarterly dividend by 1.5 cents per share, to $0.355.

This industry is all too often overlooked, like so much trash that one may pass by on a daily basis. Take a look where you work and on your way home, and you will likely see at least one of these companies handling former trash and future treasures. Almost all companies in this industry should benefit from the continued growth, technological advancement and greater need for recyclable materials that will undoubtedly come over the next several years.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Disclaimer: This article is intended to be informative and should not be construed as personalized advice as it does not take into account your specific situation or objectives.

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