Trash

Let's talk about waste.

As human being, the main thing we produce is waste. We produce more waste than we earn money. We produce more waste than we buy food or clothes. Human beings are there to spoil the planet and leave it dirtier after their passage than it was before. Many philosophers have spend all their life searching for that very simple meaning of life.

You may be tired of my constant sarcasm about everything, but you can't argue on what I'm saying here. We destroy our planet. For every single ecologist out there, there's at least 10 people who don't give a shit about oceans, animals and everything on that planet. Asians and Africans are reproducing faster and faster and claim their right to develop their country which will happen at the expense of our planet. Soon, we'll be 15 billion people on earth and it's gonna be ugly and it's gonna stink.

But let's see the positive economic aspect of that coming apocalypse: there's gonna be some money to make. 

A company operating in the sector of trash has a garantee of longevity. Eternal longevity. That's surely what you're looking for as an investor.

So let's take a look at three trash stocks that I've recently took a look at. They all look interesting to me in some aspect or another.

1- Waste Connection (WCN)
Forward PE: 27
Performance last 5 years: 230%
Performance last 10 years: 500%
Annual EPS growth last 5 years: 14%
Current ROE:10
Stock float: Large dilution (+43% shares over the last 3 years)
Debt: high
Predictability according to Value Line: High
Free cash flows: "A" rating (growing every year for the last 5 years)


2- Waste Management (WM)
Forward PE: 20
Performance last 5 years: 131%
Performance last 10 years: 153%
Annual EPS growth last 5 years: 27%
Current ROE: 45
Stock float: buybacks (-4% shares over the last 3 years)
Debt: medium
Predictability according to Value Line: High
Free cash flows:  "A" rating (growing every year for the last 5 years)


3- Republic Services (RSG)
Forward PE: 20
Performance last 5 years: 114%
Performance last 10 years: 131%
Annual EPS growth last 5 years: 19%
Current ROE: 16
Stock float:  buybacks (-4% shares over the last 3 years)
Debt: high
Predictability according to Value Line: High
Free cash flows:  "A" rating (growing every year for the last 5 years)

Despite what's written above, the growth of WM and RSG has slowed down lately. The momentum stock among these three is Waste Connection. However, the ROE of WCN is the lower of the three and there's a lot of dilution with that stock. I don't really like that. But the market prefers growth to everything else. The market prefers high growth to buy backs or high ROE. So, feel free to ignore my opinion.

But I'm not done yet with my opinion. The best managed company is probably Waste Management.

Anyway, all three have had growing free cash flows over the last five years (come on, try to find some stocks that achieved that, you'll see that it's gonna be pretty hard), and they operate in a very predictable industry. That's exactly what any investor should be looking for.

Perhaps there's no home-run there, but at least, there's steady and safe growth.