Value Investors: 1 Recession-Proof Business to Own

GFL Environmental Inc. (TSX:GFL)(NYSE:GFL) is focused on creating long term value for all stakeholders by executing on a robust growth strategy.

| More on:
Mature financial advisor showing report to young couple for their investment

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

GFL Environmental (TSX:GFL)(NYSE:GFL) operates as a diversified environmental services company in Canada and the United States. The company offers non-hazardous solid waste management, infrastructure and soil remediation, and liquid waste management services.

The company’s solid waste management business line includes the collection, and disposal of non-hazardous solid waste for municipal, residential, and commercial and industrial customers. The company’s infrastructure and soil remediation business line provides remediation of contaminated soils and GFL’s liquid waste management business collects, and disposes of a range of industrial and commercial liquid wastes.

Durable economic moat

In each of the company’s markets, GFL’s strong competitive position is supported by the significant capital investment that would be required to replicate the company’s valuable network infrastructure and asset base. GFL’s business is well diversified across business lines, geography and service type, allowing it to maintain strong revenue growth across macroeconomic cycles. GFL generates 52% of revenue from United States (U.S.) operations and 48% of revenue from the company’s Canadian operations.

GFL leverages the company’s platform to pursue new business opportunities and generate network efficiencies by extending GFL’s geographic footprint and increasing regional density across business lines. The company is led by a team of highly experienced and entrepreneurial executives who have instilled a results-oriented, entrepreneurial culture that emphasizes operational excellence and sustainability.

High return-on-capital

The company has adopted a decentralized operating structure and gives operational oversight to the company’s regional business leaders. This model is advantageous given the regional and fragmented nature of the markets in which GFL operates in and the relationship-based approach to the company’s acquisition strategy.

Furthermore, GFL’s operating structure provides employees with a greater sense of ownership, which drives the efficiency and profitability of the company’s business and provides GFL with insight into the sustainable solutions and services that matter most to customers, enhancing the company’s return on capital and results in revenue growth.

Strong revenue growth

GFL is focused on generating strong, stable organic growth and generating free cash flow by serving customers’ demand for all of the environmental solutions that it offers and by attracting new customers.

GFL’s continued success will depend on the company’s ability to further enhance and leverage this diversification, a key component of which is the company’s ability to offer customers a comprehensive service offering across all business lines. GFL should be able to expand the company’s service offerings into new geographic markets and extend the company’s geographic footprint to increase regional density.

Predictable and recurring earnings

The revenue generated from the company’s solid and liquid waste management operations is predictable and recurring in nature as a result of the stability of waste generation. GFL has historically demonstrated a strong track record of winning renewals or extensions of existing contracts with municipal customers and winning repeat business with major infrastructure, soil remediation and liquid waste customers.

Since inception, the company’s management team has built a platform that positions it well for continued growth, margin expansion and strong free cash flow generation. GFL is focused on creating long term value for all stakeholders by executing on a robust growth strategy.

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 Nikhil Kumar has no position in any of the stocks mentioned.

More on Investing

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

3 Top Dividend Stocks to Buy Under $20

Given their stable cash flows and high dividend yields, these three under-$20 stocks could boost your passive income.

Read more »

Growing plant shoots on coins
Dividend Stocks

3 Dividend Stocks to Buy During Recession to Lock In a 6% Yield

Make the most of the recession with dividend investing. You can buy stocks for a discount and lock in higher…

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Canadian Bank Stocks Near 52-Week Lows: Buy Them All With This ETF

Here's an easier way to buy the dip.

Read more »

Choice of fashion clothes of different colors on wooden hangers
Stocks for Beginners

Is Aritzia (TSX:ATZ) the Best TSX Stock to Buy in July 2022?

Aritzia’s international market expansion and improving profitability could help its stock recover fast.

Read more »

exchange traded funds
Investing

2 Cheap Vanguard and BlackRock ETFs to Buy and Hold Forever

These two funds are great ways to invest in the U.S. and Canadian stock markets.

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

Put TFSA Cash to Work: Earn a Tax-Free Yield of at Least 5%

By investing your TFSA cash in these stocks, you can earn a reliable and high yield of more than 5%.

Read more »

clock time
Investing

New TFSA Investors: Time to Buy Stocks Amid the Market Correction?

TD Bank (TSX:TD)(NYSE:TD) stock seems like a great long-term buy for beginner investors willing to put up with the short-term…

Read more »

young woman celebrating a victory while working with mobile phone in the office
Tech Stocks

3 Growth Stocks Trading at a Massive Discount Right Now

Canadian growth stocks such as Shopify have the potential to deliver market-beating gains to investors in the next year.

Read more »