Waste Connections Inc.: Growth That Doesn’t Stink

Waste Connections Inc. (TSX:WCN)(NYSE:WCN) is an unsexy investment which recently took a small dip. Here’s why investors should add this garbage collector to their radars.

| More on:
The Motley Fool

Waste Connections Inc. (TSX:WCN)(NYSE:WCN) is an integrated solid waste services company that collects, transfers, and disposes of waste products.

The Canadian waste collection company formerly known as Progressive Waste Solutions merged with Waste Connections, and the combined company is available to Canadians looking for a defensive business with a solid U.S. presence.

Long-term investors who’ve held on to Waste Connections have done very well as the stock soared over 200% in the last five years. Who would have known the business of garbage would be so profitable?

Although Waste Connections isn’t really a sexy investment, the company has been a really solid long-term investment for smart, conservative investors looking for growth.

Warren Buffett actually prefers boring, unsexy investments because the business models of such companies are usually easy to understand and future cash flows are more predictable.

Let’s face it; these days, unpredictable, high-flying tech stocks or speculative names are deemed as sexy stocks. But just because they’re sexy doesn’t mean they’re smart long-term investments that will allow you to beat the market over the long run.

Sexy appears to be associated with the high risk that comes with high reward, and adrenaline junkies love such stocks, but as a long-term investor, you should probably stick to the unsexy, robust names like Waste Connections.

In the event of a recession, people are still going to produce waste. Although less consumer spending means less waste, the amount of waste will probably stay above a certain level, so you don’t have to worry about the lack of waste to be collected.

I believe waste collection services offer investors a level of stability akin to a utility stock. Such businesses provide a necessary service and there really is no sustainable alternative solution if such a service were to halt its services.

Waste collectors are going to ride the tailwind of a strengthening U.S. economy under Trump’s pro-growth agenda. A stronger economy means consumer spending is going to go up, and with a rise in consumer spending comes a rise in garbage. That means more business for the collectors of trash like Waste Connections.

The company plans to target $725 million in free cash flow for this year as the company continues to consolidate the waste collection industry. Over the next few years, investors can expect smaller scale mergers and acquisitions as the company puts its foot on the pedal in regards to growth.


The stock currently trades at a hefty 76.07 price-to-earnings multiple, but I believe the premium is worthwhile since Waste Connections has a growth profile that really doesn’t stink.

Shares are currently over 6% off from its all-time high, so prudent investors should consider picking up shares incrementally on any signs of further weakness.

Stay smart. Stay hungry. Stay Foolish.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette has no position in any stocks mentioned.

More on Investing

A close up image of Canadian $20 Dollar bills
Dividend Stocks

Passive Income: How to Make $106 Per Month Tax Free

Holding quality, high-yield dividend stocks such as Freehold Royalties in a TFSA can help you earn tax-free income for life.

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Earn a TFSA Paycheque Every Month and Pay No Taxes on it

Stocks like First National Financial (TSX:FN) pay you monthly. You can also earn monthly dividends through portfolio diversification.

Read more »

woman analyze data

Why I’d Buy Nvidia Stock Even at Today’s Prices

Nvidia’s dominant position in the AI space and the ongoing demand for its GPUs suggest that the stock’s upward trajectory…

Read more »

stock analysis
Dividend Stocks

1 Dividend Superstar I’d Buy Over TD Bank Stock

TD (TSX:TD) stock may look undervalued, but there are reasons for the price drop. Meanwhile, this dividend superstar has more…

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Wednesday, July 17

Trading just below the key psychological level of 23,000, the TSX Composite has been posting fresh record highs for four…

Read more »

A steel grain silo storage tank with solar panel in a yellow canola field in bloom in Alberta, Canada.
Dividend Stocks

Down by 26.77%: Now Might Be the Perfect Time to Buy Nutrien Stock

This TSX stock has seen share prices fall by over 26% from its 52-week highs, but it might be the…

Read more »

Woman has an idea
Dividend Stocks

2 No-Brainer Stocks to Buy Now With $7,000

Two relatively cheap cash cows are no-brainer buys for investors with $7,000 to invest.

Read more »

dividends grow over time
Dividend Stocks

Buy This High-Yield Dividend Stock in July 2024

Buy this high-yielding dividend stock to lock in inflated yield into your portfolio to generate solid passive income for years.

Read more »