Thursday, February 26, 2015

Can You Mike Money From Trash?

It’s a dirty job but some company has got to do it. The feature that is great about the garbage collection business that they are monopolies. Once they have their foot in the door, they are on easy street. You don't have a choice of waste collection companies; you get the service from the company that has contracted with your city or you take your trash to the dump. The way these companies grow is by raising rates, which they negotiate with the cities, and by acquisitions of either publicly traded companies or small private companies.

 One example is Waste Connections Inc. (WCN), based in The Woodlands, Texas, has a network of 148 solid waste collection operations. The stock trades at 25 times trailing earnings and 20 times forward earnings. Quarterly earnings were up an incredible 22.9% on an 8.3% rise in revenues. It also pays a decent dividend of 1.1%. Last October, the company raised its dividend by 13%.

 Republic Services Inc. (RSG), based in Phoenix, Arizona, has 336 collection operations. It has a trailing price to earnings ratio of 27 and forward P/E of 19. Unfortunately, earnings take 79% for the latest quarter on a slight increase in revenues. The yield is a healthy 2.8%.

 Of course, there is Waste Management, Inc. (WM), With a trailing and forward P/E of 19. It also has a yield of 2.8%.

 If you like interesting stock lasts like this, check out many of the free stock lists at

Disclosure: Author didn't own any of the above at the time the article was written.

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