Amid escalating industrialization and urbanization, alongside growing environmental sustainability concerns and the introduction of sophisticated waste management strategies, the waste disposal sector is flourishing.
Therefore, investors could consider investing in fundamentally strong waste disposal stocks Waste Management, Inc. (WM), Ecolab Inc. (ECL), Clean Harbors, Inc. (CLH), Republic Services, Inc. (RSG), and Concrete Pumping Holdings, Inc. (BBCP) now.
The U.S., one of the world's largest waste producers, handles various types of waste, including hazardous, industrial, and municipal solid waste. Globally, it is projected that between 7 billion and 10 billion tonnes of solid waste will be created annually. This quantity can escalate with a growing population, thus heightening the necessity for effective waste management and control measures, in turn invigorating the waste management industry.
Market stability persists despite the escalating consumer waste collection costs fueled by corporations and public bodies adapting to labor shortages and soaring prices for truck parts and maintenance – all side effects of the pandemic.
For the third quarter, core prices surged 6.6%, while garbage collection and disposal volumes increased 0.3%. According to the U.S. Bureau of Labor Statistics, garbage and trash collection prices are 7.07% higher in 2023 compared to 2022.
To reinforce recycling and waste management, the U.S. Environmental Protection Agency (EPA) allocated about $100 million in grants, marking the EPA’s most significant investment toward recycling in 30 years. Its National Recycling Strategy is targeting a 50% recycling rate by 2030, compared to the current rate of 32%.
As we venture into an era underscored by significant waste challenges, technology emerges as a beacon in the pursuit of sustainable waste management, thereby contributing to the preservation of our planet.
The assimilation of advanced technologies is crucial to tackling the escalating complexities linked to waste production and its environmental impact. Evolving technology boosts more efficient and environmentally friendly waste management practices, effectively reducing ecological damage and promoting sustainability.
The global waste management market size is expected to reach $1.97 trillion, growing at a CAGR of 5.4% by 2030.
Considering these conducive trends, let's take a look at the fundamentals of the five B-rated Waste Disposal stocks, starting with number 5.
Stock #5: Waste Management, Inc. (WM)
WM provides environmental solutions to residential, commercial, industrial, and municipal customers in the United States and Canada. Its Solid Waste operating segments include East Tier; and West Tier.
Recently, WM paid a quarterly dividend of $0.70 per share to stockholders of the company. Its annualized dividend rate of $2.80 per share translates to a dividend yield of 1.58% on the current share price. Its four-year average yield is 1.69%. WM’s dividend payments have grown at CAGRs of 8.7% and 3.4% over the past three and five years, respectively.
Moreover, on December 11, WM’s board of directors approved a 7.1% increase in the quarterly dividend rate for 2024 from $0.70 to $0.75 per share. The increase in the annual dividend rate from $2.80 to $3.00 per share marks the 21st consecutive year of dividend rate increases. It is expected that the first increased dividend will be paid in March 2024.
The company also received authorization to repurchase up to $1.5 billion of the company’s common stock, superseding the authority remaining under the prior $1.5 billion authorization announced in 2022.
WM’s trailing-12-month cash from operations of $4.39 billion is significantly higher than the industry average of $293.14 million. Its trailing-12-month net income and EBITDA margins of 11.47% and 28.25% are 88.4% and 106% higher than the industry averages of 6.09% and 13.72%, respectively.
Over the past three and five years, its EBITDA grew at CAGRs of 10.8% and 6.6%, respectively, while its total assets grew at 8.8% and 7.2% CAGRs over the same periods.
In the fiscal third quarter that ended September 30, 2023, WM’s operating revenues and adjusted income from operations increased 2.4% and 7.6% year-over-year to $5.20 billion and $1.02 billion, respectively.
For the same quarter, adjusted net income and adjusted EPS stood at $664 million and $1.63, up 2.9% and 4.5% from the prior-year quarter, respectively. Moreover, its adjusted operating EBITDA increased 6.1% from the year-ago quarter to $1.54 billion.
Street expects WM’s revenue and EPS in the fiscal fourth quarter ending December 2023 to increase 5.3% and 17.7% year-over-year to $5.20 billion and $1.53, respectively.
The stock has gained 12.7% year-to-date to close the last trading session at $176.78. Over the past nine months, it has gained 15.4%.
WM’s POWR Ratings reflect its positive prospects. The stock has an overall B rating, equating to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has a B grade for Stability and Quality. Within the B-rated Waste Disposal industry, it is ranked #5 out of 14 stocks.
To see additional POWR Ratings for Growth, Value, Momentum, and Sentiment for WM, click here.
Stock #4: Ecolab Inc. (ECL)
ECL provides water, hygiene, and infection prevention solutions and services in the United States and internationally. The company operates through Global Industrial; Global Institutional & Specialty; and Global Healthcare & Life Sciences segments.
On December 7, ECL’s board of directors declared an 8% increase in the company’s quarterly dividend to $0.57 per common share, payable to the shareholders on January 16, 2024. This represents ECL’s 32nd consecutive annual dividend rate increase. The company has paid cash dividends on its common stock for 87 consecutive years.
Its annualized dividend rate of $2.28 per share translates to a dividend yield of 1.16% on the current share price. Its four-year average yield is 1.07%. ECL’s dividend payments have grown at CAGRs of 4.6% and 5% over the past three and five years, respectively.
ECL’s trailing-12-month cash from operations of $2.42 billion is 481.8% higher than the industry average of $415.73 million. Its trailing-12-month gross profit and levered FCF margins of 39.55% and 11.82% are 39.1% and 187.8% higher than the industry averages of 28.43% and 4.11%, respectively.
Over the past three and five years, its total assets grew at CAGRs of 6.5% and 1.8%, respectively, while its levered free cash flow grew at a 7.8% CAGR over the past five years.
In the fiscal third quarter that ended September 30, 2023, ECL’s net sales and adjusted gross profit increased 7.9% and 18% year-over-year to $3.96 billion and $1.63 billion, respectively. Moreover, its free cash flow stood at $621.20 million, up 154.4% from the year-ago quarter.
For the same quarter, adjusted net income attributable to ECL and adjusted EPS stood at $441.70 million and $1.54, up 18.6% and 18.5% from the prior-year quarter, respectively.
Street expects ECL’s revenue and EPS in the fiscal fourth quarter ending December 2023 to increase 7.2% and 21.1% year-over-year to $3.94 billion and $1.54, respectively. The company surpassed consensus EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained 27.3% over the past nine months to close the last trading session at $196.84. Over the past year, it has gained 39.4%.
ECL’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to Buy in our proprietary rating system.
ECL has a B grade for Growth, Stability, and Quality. Within the same industry, it is ranked #4.
In addition to what we’ve stated above, we have also rated the stock for Value, Momentum, and Sentiment. Get all ratings of ECL here.
Stock #3: Clean Harbors, Inc. (CLH)
CLH provides environmental and industrial services in the U.S. and internationally. The company operates through two segments: The Environmental Services and The Safety-Kleen Sustainability Solutions.
On December 7, CLH’s Board of Directors authorized a $500 million expansion of the company’s existing share repurchase program. As of December 1, 2023, approximately $54 million of availability remained in the existing program. CLH intends to fund the share repurchases through its available cash resources.
CLH’s trailing-12-month cash from operations of $724.36 million is 147.1% higher than the industry average of $293.14 million. Its trailing-12-month EBIT and EBITDA margins of 11.08% and 17.70% are 13.9% and 29.1% higher than the industry averages of 9.73% and 13.72%, respectively.
Over the past three and five years, its total assets grew at CAGRs of 15% and 10.6%, respectively, while its levered free cash flow grew at 14.6% and 18.7% CAGRs over the same periods.
In the fiscal third quarter that ended September 30, 2023, CLH’s revenues increased marginally year-over-year to $1.37 billion, while income from operations stood at $154.37 million. Moreover, its adjusted free cash flow stood at $114.70 million.
For the same quarter, adjusted net income and adjusted earnings per share stood at $91.34 million and $1.68, respectively.
Street expects CLH’s revenue and EPS in the fiscal fourth quarter ending December 2023 to increase 6.2% and 18.6% year-over-year to $1.36 billion and $1.71, respectively. The company surpassed consensus EPS estimates in three of the trailing four quarters.
The stock has gained 32.6% over the past nine months to close the last trading session at $178.07. Over the past year, it has gained 58.2%.
CLH’s robust prospects are reflected in its POWR Ratings. The stock has an overall B rating, equating to Buy in our proprietary rating system.
CLH has a B grade for Value, Stability, and Quality. It is ranked #3 within the same industry.
Click here for CLH’s additional POWR Ratings (Growth, Momentum, and Sentiment).
Stock #2: Republic Services, Inc. (RSG)
RSG offers environmental services in the U.S. It is involved in the collection and processing of recyclable, solid waste, and industrial waste materials; transportation and disposal of non-hazardous and hazardous waste streams; and other environmental solutions.
On December 5, RSG opened its Polymer Center in Las Vegas, the first-of-its-kind facility in North America, enabling greater circularity for plastics and helping meet the growing demand for recycled material. The Polymer Center expects to produce more than 100 million pounds of recycled plastics each year for use in sustainable packaging and other applications. This should bode well for the company.
The company declared a regular quarterly dividend of $0.535 per share for shareholders, payable on January 16, 2024. Its annualized dividend rate of $2.14 per share translates to a dividend yield of 1.31% on the current share price. Its four-year average yield is 1.53%. RSG’s dividend payments have grown at CAGRs of 7.2% and 7.5% over the past three and five years, respectively.
RSG’s trailing-12-month cash from operations of $3.53 billion is significantly higher than the industry average of $293.14 million. Its trailing-12-month EBIT and EBITDA margins of 18.57% and 28.75% are 90.9% and 109.6% higher than the industry averages of 9.73% and 13.72%, respectively.
Over the past three and five years, its operation income (EBIT) grew at CAGRs of 14.7% and 10.2%, respectively, while its total assets grew at 9.1% and 7% CAGRs over the same periods.
In the fiscal third quarter that ended September 30, 2023, RSG’s revenue and operating income increased 6.3% and 9.6% year-over-year to $3.83 billion and $727.80 million, respectively. Moreover, its adjusted EBITDA stood at $1.15 billion, up 9% from the year-ago quarter.
For the same quarter, adjusted net income and adjusted earnings per share stood at $488.30 million and $1.54, up 14.8% and 14.9% from the prior-year quarter, respectively.
Street expects RSG’s revenue and EPS in the fiscal fourth quarter ending December 2023 to increase 5.8% and 14.2% year-over-year to $3.73 billion and $1.29, respectively. The company surpassed consensus revenue and EPS estimates in each of the trailing four quarters.
The stock has gained 26.2% year-to-date to close the last trading session at $162.80. Over the past nine months, it has gained 24.5%.
It is no surprise that RSG has an overall rating of B, equating to Buy in our proprietary rating system.
RSG has a B grade for Stability, Sentiment, and Quality. It has ranked #2 within the same industry.
Beyond what we have mentioned above, we have also rated RSG for Growth, Value, and Momentum. Get all RSG ratings here.
Stock #1: Concrete Pumping Holdings, Inc. (BBCP)
BBCP provides concrete pumping and waste management services in the United States and the United Kingdom. The company operates through four segments: U.S. Concrete Pumping; U.K. Operations; U.S. Concrete Waste Management Services; and Corporate.
BBCP’s trailing-12-month CAPEX/Sales of 14.68% is 392.4% higher than the industry average of 2.98%. Its trailing-12-month EBIT and EBITDA margins of 13.91% and 27.37% are 43% and 99.6% higher than the industry averages of 9.73% and 13.72%, respectively.
Over the past three and five years, its revenue grew at CAGRs of 12.2% and 13.2%, respectively, while its EBITDA grew at 7.7% and 10.6% CAGRs over the same periods.
In the fiscal third quarter that ended July 31, 2023, BBCP’s revenue and gross profit increased 15.5% and 18% year-over-year to $120.67 million and $49.48 million, respectively.
For the same quarter, income available to common shareholders and net income per common share stood at $9.90 million and $0.18, respectively. Moreover, its adjusted EBITDA stood at $34.92 million, up 16.2% from the prior-year quarter.
Street expects BBCP’s revenue and EPS in the fiscal first quarter ending January 2023 to increase 5% and 28.1% year-over-year to $98.26 million and $0.07, respectively. The company surpassed consensus revenue and EPS estimates in three of the trailing four quarters.
The stock has gained 42.2% year-to-date to close the last trading session at $8.32. Over the past nine months, it has gained 22.4%.
BBCP’s POWR Ratings reflect this promising outlook. It has an overall rating of B, which indicates Buy in our proprietary rating system.
BBCP has a B grade for Growth, Momentum, Stability, and Quality. Within the same industry, it is ranked first.
To see the other ratings of BBCP for Value and Sentiment, click here.
What To Do Next?
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WM shares were unchanged in premarket trading Wednesday. Year-to-date, WM has gained 14.69%, versus a 26.05% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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