15 WASTE MANAGEMENT STOCKS LIST & SECTOR ANALYSIS – Detailed Analysis on 15 Stocks
Waste Management Stocks Global Sector Investment Analysis by Sven Carlin Ph.D. – Stock Market Research Platform.
This report starts with a list of 15 waste management stocks from developed markets with links to individual analysis articles. Below the list, there is general overview of the industry, what are the key factors to look at when it comes to investing, the global trends where you can find opportunities.
Waste management stocks list
Here is the Waste Management Stocks Google Sheets List for the 15 developed markets waste management stocks.
Waste management stocks list with links to individual waste management stock analyses. (give me a few days to publish all the specific articles)
- Advanced Disposal Services Stock Analysis NYSE ADSW Takeover shows what can happen to other similar stocks
- Clean Harbors Stock Analysis, Inc NYSE CLH – leave it to index funds
- Covanta Holding Corporation Stock Analysis NYSE CVA – Dividend cut and bankruptcy risk is too high
- Donaldson Stock Analysis NYSE DCI – Safe, sound and boring can be a bad investment
- Evoqua Water Technologies Stock Analysis NYSE AQUA – Good business but 50% downside risk
- Hitachi Zosen Corporation Stock Analysis TYO 7004 – Margins Are Just Going to Increase – yeah right!
- Suez Environment Stock Analysis EPA SEV – Free ECB Money Allows Suez to Dream
- Veolia Environment Stock Analysis – EPA VIE – the dividend is not high enough
- Waste Management Inc. NYSE WM stock analysis– Moat and Scale, but Easily Down 50% in Next Downturn
- Republic Services, Inc NYSE RSG – Valuations are too high for significant long-term investing returns (check video for quick comment)
- Arcadis AMS – ARCAD – good project company but nothing special, no competitive advantage (check video for quick comment)
- Waste Connections Inc NYSE WCN – Moat but expensive to invest – (check video for quick comment)
- Steris Plc Stock Analysis NASDAQ STE – A good business but overvalued
- Stericycle Stock Analysis – NASDAQ SRCL – the stock has already turned around
- Tennant Co NYSE TNC – (check video for quick comment)
If you prefer listening – here is a video running through my Waste Management Stocks Report. Stocks list and Waste management sector analysis continues below the video.
Introduction to investing into the Waste Management Stocks industry
This is a short summary of my initial thoughts and findings on Waste Management.
Did you know, the average American throws away 2.01 kg (4.43lb) of rubbish every day, or, that the total volume of Municipal Solid Waste (MSW) produced in the US, each year, is equal to the weight of 5,600 Nimitz Class aircraft carriers, 247,000 space shuttles, or 2.3m Boeing 747 jumbo jets. And, if all of the solid waste collected in the US was put in a line of average sized waste disposal trucks, that line would extend from NYC to Los Angeles, over 100 times. Also, 40% of all food in the US goes uneaten and is thrown away. (Source: Bank of America Merrill Lynch – Waste)
Well, stick with me and ‘fun’ statistics like these will be at your fingertips. Over the last few weeks, I have had to read through them all. So, I’m going to inflict a few on you. With this report, amaze and fascinate your family and friends. In fact, don’t buy them presents (too much waste) email them this report instead, as a gift!
But, for you as a value investor, let’s have another ‘fun fact’ and this time a special question. According to the World Bank, commercial fees for collecting MSW range from about $35 per year in low-income countries to $300 in high-income countries (see, fascinating). The question – Do you know why this is important and how it will make you money?
No.
Well, congratulations, your about to find out.
Let’s start off by explaining there are many areas to waste management, recycling, circular energy production etc. Here, I am predominantly going to be talking about traditional good old-fashioned waste, rubbish, garbage, call it what you will. You know what I mean. The dirty stuff.
Why? Because, I am old fashioned and I like my rubbish old fashioned, plus, globally, only 25 percent of this type of waste is currently recovered or recycled. In other words, it’s a growth area. How do we know this?
Waste Management – Prospects for Global Growth
According to The World Bank, an estimated 2.01 billion tonnes of municipal solid waste was generated in 2016, this number is expected to grow to 3.40 billion tonnes by 2050 (under a business-as-usual scenario).
Source: World Bank
The total quantity of waste generated in low-income countries is expected to increase more than three times by 2050. Currently, the East Asia and Pacific region is generating most of the world’s waste, at 23 percent, and the Middle East and North Africa region is producing the least in absolute terms, at 6 percent. By 2050, however, waste generation in Sub-Saharan Africa, South Asia, and the Middle East, North Africa regions, is expected to approximately triple, double, and double, respectively.
Current estimates for the MSW market alone are USD $410-433 billion per year. Estimates for the total global waste management market are as high as USD $1 trillion given it’s larger range (for example, industrial waste, wastewater and sewage, sustainable packaging, and e-waste).
So, lots of rubbish is being generated and needs to be dealt with. But more importantly, the world population, as a whole, is growing, increasingly it is moving into towns and cities, it is also becoming richer. The impact of this is illustrated in the next few charts:
What do these charts explain. In basic terms, amounts of waste are largely determined by: i) population size; and ii) consumption patterns, these factors are controlled by GDP per capita growth. In other words, as a population grows, so does the amount of waste it creates. As that population becomes richer, consumption also increases, again creating more waste (a 1 percent increase in national income generates a 0.69 percent rise in MSW).
Similarly, as a population becomes richer, they, in general, move into towns and cities for work. As a result, waste collection becomes more of a priority, due to space and health concerns. These same concerns usually force governments and local councils to spend more cash on waste management. Cash which they collect from the same newly rich residents. Residents who do not want to live in slums, watching their children die of disease, like in the good old days.
These governments introduce health laws and regulations about waste disposal, to comply with global standards. These laws and regulations create barriers to business entry and allow monopolies to develop for those waste management firms who have obtained contracts from those same governments and councils.
What Do Waste Management Trends Mean To a Value Investor?
Well, perhaps rather than focus on companies, like Amazon, who stuff products into boxes and deliver them around the world, we should be concentrating on what happens to that box once we throw it in the bin. Waste disposal means:
- We have a market which is growing in size;
- We have a market with steady, predictable, long term revenue streams, created through city waste management contracts;
- And, we have a market which will never go out of fashion (everyone has got to eat etc etc)
But, importantly, for investors, as we have already mentioned, when people become richer, they move to cities and spend more per family, they produce more waste. However, this new waste is different. It is more expensive. Those empty IPhone boxes and foil wrappers are more valuable and can be recycled. And, perhaps more importantly, because we live in cities and put out our rubbish for disposal, waste becomes easier to collect, things can be done more efficiently, economies of scale kick in, larger companies take over responsibility, it’s easier to get customers to pay up as they have bank accounts and best of all, as they are richer you can force them to pay more for their waste collection.
Waste management, done well, can create a business environment with a large moat, that has constant demand for its products and the ability to charge customers higher prices for the same thing year in year out.
The Downside of investing into Waste Management Stocks
That all sounds great, a licence to print money. But there is always a downside or a voice of caution. Here are a few issues:
- In reality, waste management is closely linked to economic cycles, the market is largely driven by a combination of industrial output, revenue growth, and domestic consumption. For example, the MSW industry was, likely everyone else, hit by the Great Recession, with the EU most affected in terms of industrial production and GDP forecasts. A recession can mean pricing pressure, a decrease in treated waste volumes and landfill, plus emerging markets can be hit by currency and inflation fluctuations. This is especially true when local governments, in search of greater returns have exposed themselves to sovereign debt investments or issued local bonds.
- MSW is often one of the largest single budget items for many cities. If EM municipal government finances are strained, how likely are they to move away to more expensive waste management?
- Currently, globally, about 37 percent of waste is disposed of in some type of landfill, 33 percent is openly dumped, 19 percent undergoes material recovery through recycling and composting, and 11 percent is treated through modern incineration. Waste disposal or treatment using controlled landfills is almost exclusively the domain of high- and upper-middle-income countries. Lower-income countries generally rely on open dumping, 93 percent of waste is dumped in low-income countries and only 2 percent in high-income countries. With no money and large areas of cheap, empty land mass available, will this change significantly in some EM countries?
- The adoption of new billing systems in developed markets, for instance, the pay-per-weight system in France, is considered, by analysts, to mean downward short-term pricing pressure, as they are designed to push customers to consume less and/or recycle more. Although, longer term, it could also enable large and innovative players to gain market share and improve their collection businesses (fixed services paid for by the customers). Short term, these changes could affect profit margins.
- Many companies within waste management are becoming sizeable materials and energy suppliers, due secondary raw materials recovery, waste-to-energy processes etc. As a result, they are increasingly exposed to volatility in commodity prices, a process that has to be managed. Some companies have a significant sensitivity to an industry metric, adjusted operating cash flow to recycled materials price fluctuations. Companies need to be more sophisticated around hedging strategy.
- Finally, for retail investing purposes, most publicly listed waste disposal companies are based in developed markets. Global waste management is still, generally, locally based small family firms or perhaps run in house by the state or municipal government. Many of the changes mentioned in this report have yet to happen on a sufficiently large enough scale. It is still early days for investors and hard for the general public to gain exposure to the global market fully at this time.
Waste Management stocks sector analysis conclusion – The Future Reality
Going forward, in line with many other sectors we have previously researched, analysts anticipate a two-tier growth story within MSW:
Many developed markets, particularly in Europe, face structural changes in the waste business coupled with lower waste volumes and a shift, in what is called, ‘the waste treatment mix’ (more recycling, less landfilling/incineration). These changes will hit margins.
The EM MSW market is expanding fastest on the back of: a sense of urgency due to climate change and population growth, the need for a waste solution and profit opportunities created from increased regulation, increasing barriers to market entry, caused by economies of scale, new regulations etc. But in many places these changes have yet to take place, at least in a way that global retail investors can exploit. That said, analysts consider Asia and Latin America to be the most attractive regions, with China and Brazil the biggest growth markets.
So, I have been doing some searching through all the rubbish (I couldn’t resist that joke) and I have researched through a number of companies, around 30 or so. A large number belong in developed markets and are a US or European listed company. They are mostly the largest waste managers globally. Some feature in one of the few ETFs specifically designed to cover waste investing, or, were uncovered, in the natural cause of events, by myself, whilst carrying out my research. All are considered, by analysts, to have a high exposure to the waste management sector. To find the analysis of 15 waste management stocks from developed markets just scroll back to the beginning of this article.
Sven Carlin Ph.D., the author, is an independent stock market researcher and investor managing the Sven Carlin Stock Market Research Platform.
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