We recently compiled a list of the 10 Best Waste Management Stocks to Buy According to Analysts. In this article, we are going to take a look at where Waste Connections, Inc. (NYSE:WCN) stands against the other waste management stocks.

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.

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).

Waste Connections, Inc. (NYSE:WCN)

Market cap as of November 22, 2024: $48.77 Billion

Number of Hedge Fund Holders: 48

Stock Upside Potential: 6.15% 

Waste Connections, Inc. (NYSE:WCN) is one of the best waste management stocks to buy, specializing in providing non-hazardous waste collection, transfer, disposal, and resource recovery services. While the company offers collection services to residential, commercial, municipal, industrial, and exploration and production (E&P) customers, its stock is up by 27.17% year to date.

The outperformance stems from Waste Connections, Inc. (NYSE:WCN) actively engaging in mergers and acquisitions that have increased its market share and service offerings. This includes the purchase of Lone Star Disposal, LP, and a significant participant in Texas’ waste management market. Progressive Waste Solutions is also a part of it. The solid pipeline of acquisitions and mergers is expected to contribute $700 million worth of annualized revenue.

Waste Connections, Inc. (NYSE:WCN)’s long-term prospects remain intact, given that waste management is a necessary service with consistent demand that generates a steady flow of income. It delivered better-than-expected third-quarter results on October 23, 2024, with revenue increasing 13.3% year over year as adjusted earnings increased 17.3% to $787.4 million. Net income per share came in at $1.19 and adjusted EBITDA margin improved 120 basis points to 33.7%. The solid results came against the backdrop of solid pricing supplemented by incremental acquisition contribution.

Overall WCN ranks 7th on our list of the best waste management stocks to buy according to analysts. While we acknowledge the potential of WCN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than WCN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.