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Waste Management (WM -5.9%) continues lower following a downgrade to Underweight from Morgan...

Waste Management (WM -5.9%) continues lower following a downgrade to Underweight from Morgan Stanley's Vance Edelson. Buy Republic Services (RSG) instead, he says. It's cheaper, buying back more of its shares, and is entangled with fewer "non-core distractions."
Comments (5)
  • James Sands
    , contributor
    Comments (2088) | Send Message
     
    I think WM has a ton of potential with its diversified businesses. However, I'm seeking growth, so I just went long on CLH. I'm not sure if RSG is going to offer a much better situation than WM. I think it's more wise to be getting into these stocks during market corrections/recessions or in the event you don't want much risk.
    11 Jul 2012, 02:52 PM Reply Like
  • billkaiserct
    , contributor
    Comment (1) | Send Message
     
    Worked in the industry - WM has the best assets in the industry and, accordingly, a very solid base in the core business - this allows them to seek some higher growth opportunities in areas that are synergistic to the core - mgt. is committed to shr. value creation. Long term who would think that energy production and recycling are not going to be winners. with the downturn this presents a buying opportunity. Compare WM to the 10 yrs. treasury - easy choice!
    11 Jul 2012, 03:48 PM Reply Like
  • James Sands
    , contributor
    Comments (2088) | Send Message
     
    Last ten years, WM has returned 2.6% per year including dividends. I'm looking for growth. I think WM has great assets as you mentioned. This doesn't guarantee that much will change from a return on investment perspective in the future.

     

    Companies like Clean Harbors and Stericycle are growing much more robustly as they are acquiring companies to grow and they focus in more specialized waste management areas.

     

    For comparison, Clean Harbors has returned on average, 44% per year (primarily due to extremely low prices during earlier trading years) over the last ten years. Five-year average might show a better picture based on higher baseline price, but still Clean Harbors has returned an average of 21 percent per year.

     

    Stericycle has returned on average, 18 percent per year over the past ten years, and 16 percent per year over the last five years.

     

    I will reconsider WM in another 20 years or so, hopefully the dividend will still be a strong point.
    11 Jul 2012, 04:06 PM Reply Like
  • DMMEXMD
    , contributor
    Comments (33) | Send Message
     
    I commented on this after a previous article, 'Abtech, A 3-Tiered Growth Story That Will Scale Like Zagg Did', Seeking Alpha June 19, 2012. According to the article Waste Management and Abtech have formed a partnership to distribute Abtech's system for treatment of stormwater discharge. Stormwater runoff is a major source of water pollution and has become a major emphasis for the EPA. Federal mandates have been imposed on a number of entities, including municipalities. This may become one of the largest industries of the decade. Abtech has a patented product that is far superior to any other existing. WM has business relationships with thousands of municipalites. According to the article, WM has also arranged for financing of the installations of the systems. With many local governments under severe financial constraints, this may be a huge advantage in acquiring business. The arrangement has huge potential benefits for Abtech, which is a very small company. What's not clear to me is how WM will benefit and why they are being so reticent in discussing the arrangements. The only mention that I found other than the Seeking Alpha article was through the Abtech website, http://bit.ly/O9H34f and then Investor Relations/News Releases for a release on June 16, 2012. I couldn't find anything about it on WM's website. Could it be that they are stealing a march on their competitors? WM's business relationships with municipalities will obviously be a great advantage in getting contracts for the stormwater treatment systems. Is it possible that the need for those systems by other municipalities which are presently served by WM's competitors will open doors for WM to acquire the waste management contracts as well? It could be a remarkable synergy. I can foresee that the stormwater treatment business could become as big as their present waste disposal business while helping the latter grow even bigger. Now that would be a 'non-core distraction' worth pursuing!
    Disclosure: As you might guess, I'm heavily (for me) invested in Abtech. I just bought into WM and if the price continues to go down I intend to buy more.
    11 Jul 2012, 10:52 PM Reply Like
  • Randy Sommovilla
    , contributor
    Comments (32) | Send Message
     
    What are WM's "non-core distractions"? Methane production? Recycling? It certainly seems to me that these pursuits are integral parts of trash hauling and disposal.
    12 Jul 2012, 12:14 PM Reply Like
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