Waste Connections Stock is as Recession-Proof as You Can Get

Waste Connections Inc. is a top TSX defensive stock that Canadians can trust as some recession signs continue to flash in 2023.

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Earlier this year, Refinitiv revealed that the pace of debt deals, stock sales, and mergers and acquisitions activity fell to multi-decade lows in Canada. That sparked more fears of a recession while Canadian consumers wrestled with mounting debt and rising interest rates. However, a rebound for capital markets starting in the second quarter has alleviated some of those fears. Regardless, it does not hurt to snatch up a recession-proof TSX stock. Waste Connections (TSX:WCN) is one of my favourite recession-proof equities to target. Let’s jump in.

How has this TSX stock performed over the past year?

Waste Connections is a Toronto-based company that provides non-hazardous waste collection, transfer, disposal, and resource recovery services in the United States and Canada. Shares of Waste Connections have increased 2.3% month over month as of early afternoon trading on July 6. The stock is up 4.1% in the year-to-date period. Investors can see more of its recent performance with the interactive price chart below.

Here’s why Waste Connections is the perfect recession-proof Canadian stock

The top market researcher IBISWorld recently valued the United States waste collections services market at US$73.7 billion in 2022. This same report estimated that the industry grew 1.5% in that same year. Meanwhile, Grand View Research valued the global waste management market at US$1.3 trillion in 2022. The report forecasts that this market will achieve a compound annual growth rate (CAGR) of 5.4% from 2023 through to 2030. This is an industry that investors can trust in the near and long term.

Should investors be happy with the company’s recent earnings?

Back in June, Waste Connections announced that it would unveil its second quarter fiscal 2023 earnings after the stock market closes on August 2, 2023. The company released its first quarter fiscal 2023 results on April 26.

Waste Connections delivered revenue growth of 15% year over year to $1.9 billion in the first quarter of fiscal 2023. Meanwhile, it reported adjusted net income per share of $0.89. In Q1 2023, the company delivered adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $566 million.

This company posted record solid waste pricing growth in the first quarter. Moreover, it also achieved strong operational execution and kept up strong acquisition activity. Waste Connections put together a strong quarter in the face of macroeconomic challenges. For example, the drop in resource recovery values was expected to bring on significant headwinds. Meanwhile, there were weather-related impacts to solid waste roll-off activity and landfill volumes.

Waste Connections: Should you buy this stock today?

In its first quarter report, Waste Connections maintained its full-year financial guidance that it had provided back in February 2023. That should pique investors interest in the face of a shaky market and overall economy.

Shares of this defensive TSX stock are trading in solid value territory at the time of this writing. Moreover, Waste Connections is set for decent earnings growth in the quarters ahead. This stock last paid out a quarterly dividend of $0.255 per share. That represents a very modest 0.7% yield.

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 Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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