In this article, we will take a look at the 10 best waste management stocks to buy according to analysts.
The waste management industry is experiencing robust growth as industrialization and urbanization gather steam. Positive trends in government regulations and the use of advanced technologies in waste management are also fueling growth. According to Grand View Research the industry was valued at $1.29 trillion in 2022 and is projected to grow at a compound annual growth rate of 5.4% from 2023 to 2030.
The growth is expected to gather pace due to stringent government regulations pertaining to resource conservation and waste shipment regulation to improve service delivery. Escalating waste volumes from medical facilities industries to residential settings due to urbanization are also expected to impact the sector positively. The sector is also supported by factors such as the growth of smart cities and the rising use of integrated waste management systems.
READ ALSO: 10 Best Recycling Stocks to Buy According to Hedge Funds and 11 Best NYSE Penny Stocks to Buy Right Now.
The surge in hazardous waste is one of the factors strengthening the prospects of waste management companies. America has consistently topped the charts as the most wasteful country in the world, with over 239 million metric tons of garbage every year. While most people might perceive it as a threat to the environment and society, it presents a massive opportunity for waste management companies.
“It’s a profitable industry,” according to Debra Reinhart, a Board of Scientific Counselors member for the EPA. “It’s a difficult industry, but it is profitable if it’s done right.”
Consequently, advanced waste disposal methods and techniques have emerged as a result of growing awareness about proper waste disposal to preserve the health of humans and animals. Waste management companies must dispose of or recycle waste on time due to the presence of large quantities of hazardous compounds, including metals and salts.
The growing demand for efficient solid waste management frameworks and strategies that prioritize public security and economic development is a welcome for waste management companies. For starters, it’s made it possible for companies to hike prices for their services, citing their efficient solid waste management systems. The price increases have resulted in robust revenue growth and improved profit margins, allowing waste management companies to generate more shareholder value.
As long as there are people and companies who see trash as a resource rather than waste, the solid waste management sector will only keep growing. As governments worldwide agitate for a safe environment free of hazardous or other waste materials, companies engaged in waste management will always record booming business.
Similarly, as the US economy steers from recession following the Federal Reserve cutting interest rates for the second time, booming industrial activity is expected, resulting in more waste generated by factories. Likewise, consumer purchasing power has also been boosted, given the low interest rates in play, which should result in more waste volume due to increased spending on various items.
Consequently, waste management companies are on the cusp of booming business due to higher waste volumes. With most hiking prices amid limited opposition, now would be the best time to closely watch the best waste management stocks to buy as they are well poised to generate long-term value.
Source: Pexels
Our Methodology
To compile the list of the best waste management stocks to buy according to analysts, we scanned the stock market for companies engaged in all kinds of waste management. We then settled on waste management stocks that Wall Street analysts believe are well poised to explode backed by solid underlying fundamentals. Upon analyzing hedge fund sentiment and holdings, we ranked the stocks in ascending order based on their upside potential, as of November 22.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Waste Management Stocks to Buy According to Analysts
10. Waste Management, Inc. (NYSE:WM)
Market cap as of November 22, 2024: $88.91 Billion
Number of Hedge Fund Holders: 54
Stock Upside Potential: 1.33%
Waste Management, Inc. (NYSE:WM) is a leading provider of waste management services specializing in collecting and transporting waste and recyclable materials to transfer stations, material recovery facilities or disposal sites. The company has demonstrated strong operational performance, with its financial results meeting expectations for the better part of the year.
Waste Management, Inc. (NYSE:WM) stands out as one of the best waste management stocks to buy owing to its strong pricing power in the waste management sector. Pricing power allows the company to offset cost inflation and, most importantly, drive margin expansion. The company’s ability to maintain stable operations even during economic fluctuations also underscores its ability to generate long-term value.
The stock’s sentiments were significantly boosted when Waste Management, Inc. (NYSE:WM) delivered solid third-quarter results on October 28, 2024, which affirmed the strength of its waste management operations. Revenue in the quarter was up 7.9% year over year to $5.6 billion, driven by solid execution on pricing. Adjusted earnings were also up by 11% to $1.88 a share. Additionally, Waste Management grew its cash from operations for the first three quarters of the year by 16% and is on course to achieve $2.15 billion in free cash flow by the end of the year.
9. Casella Waste Systems, Inc. (NASDAQ:CWST)
Market cap as of November 22, 2024: $7.05 Billion
Number of Hedge Fund Holders: 28
Stock Upside Potential: 3.59%
Casella Waste Systems, Inc. (NASDAQ:CWST) is a vertically integrated solid waste services company that offers resource management services in solid waste collection. While the stock has outperformed the overall market by 31.47% year to date, management has been making strategic moves to bolster long-term prospects and strengthen its revenue base.
The company has already reached an agreement to acquire Royal Carting and Welsh Sanitation as it continues to expand its waste management operations. The acquisitions are expected to generate over $90 million in annualized revenues. Even though it anticipates a decrease in solid waste volume of 1-2%, it expects solid waste price growth at the upper end of 5% to 6%.
Casella Waste Systems, Inc. (NASDAQ:CWST) benefited from a 5.5% solid waste pricing increase in the third quarter going by its earnings report on October 30, 2024. Consequently, the company delivered a 16.7% increase in revenue as adjusted earnings increased 14.9% year over year to $102.9 million. The company has demonstrated strong revenue growth of 27.76% over the past 12 months. With a healthy gross profit margin of 34.22%, the business is effectively managing costs in relation to revenue, affirming why it is one of the best waste management stocks to buy.
Here is what Alger Weatherbie Specialized Growth Fund said about Casella Waste Systems, Inc. (NASDAQ:CWST) in its first quarter 2024 investor letter:
“Casella Waste Systems, Inc. (NASDAQ:CWST) is a regional, integrated solid waste management services company that provides collection, transfer, landfill disposal, and recycling services primarily in secondary markets throughout the northeastern U.S. During the quarter, shares contributed to performance after the company reported strong fiscal fourth quarter results, as revenues grew 32% year-over-year. Solid waste revenues during the quarter were also strong, as steady price increases offset a slight decline in volumes. Further, management provided forward guidance that met analyst estimates, as management believes margins should continue to improve going forward. We believe Casella is well positioned for long-term growth, driven by strong pricing power, an attractive landfill footprint across the northeast U.S., and further expansion into the mid-Atlantic region.”
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