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Waste Management: Make Garbage Green Again

May 08, 2018 2:24 AM ETWaste Management, Inc. (WM)8 Comments
Joseph Harry profile picture
Joseph Harry


  • Waste Management is a relatively boring, recession-resistant business.
  • Underlying capital allocation metrics are slightly above average.
  • Valuations look steep.

Waste Management (NYSE:WM) looks like a boring business that simply collects your garbage, at least at first glance. It's also North America’s leading provider of comprehensive waste management environmental services. I've been attracted to the business for some time, ever since I found about its ability to turn landfill gas into clean, renewable energy. I'm not sure if this is going to be a huge growth driver for the overall business anytime soon - or ever - but it's definitely interesting enough to keep me watching the company. According to Waste Management's 10-K:

We develop, operate and promote projects for the beneficial use of landfill gas through our WM Renewable Energy organization. Landfill gas is produced naturally as waste decomposes in a landfill. The methane component of the landfill gas is a readily available, renewable energy source that can be gathered and used beneficially as an alternative to fossil fuel. The U.S. Environmental Protection Agency (“EPA”) endorses landfill gas as a renewable energy resource, in the same category as wind, solar and geothermal resources. As of December 31, 2017, we had 127 landfill gas beneficial use projects producing commercial quantities of methane gas at owned or operated landfills. For 102 of these projects, the processed gas is used to fuel electricity generators. The electricity is then sold to public utilities, municipal utilities or power cooperatives. For 13 of these projects, the gas is used at the landfill or delivered by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes. For 12 of these projects, the landfill gas is processed to pipeline-quality natural gas and then sold to natural gas suppliers.

Pretty interesting stuff, right?

The company currently owns or operates about 244 solid waste landfills, which is the second largest component of the firm's revenues, behind collections:

This article was written by

Joseph Harry profile picture
I write to transfer all the investment ideas and concepts cluttered in my head onto (digital) paper. This helps me evaluate them with more clarity, while also subjecting them to public scrutiny. I'm also currently a CFA candidate. I passed the level 1 exam in June 2015.

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