Sometimes the smartest investments aren’t flashy. They’re occasionally in industries most people find boring. This is why private equity firms love HVAC companies, funeral homes, and waste management businesses.
These aren’t sexy, but they generate steady cash without much drama. On the TSX, aside from banks and energy, a couple of names in the garbage disposal space stand out. They don’t pay high dividends, but they’re reinvesting profits into growth. Here are two picks.
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Waste Connections
Waste Connections (TSX:WCN) operates in a mature oligopoly, providing waste and recycling services across North America, including both the U.S. and Canada.
In Q1 2025, the company reported revenue of US D$2.228 billion, up from US D$2.073 billion the prior year, a 7.5% year-over-year revenue increase. Adjusted net income rose roughly 5%, driven by both organic growth and acquisition.
Speaking of acquisitions, Waste Connections added approximately US $750 million in annualized revenue via purchases in 2024 and continues aggressive M&A into 2025.
That growth, plus its pricing power and stable balance sheet (net leverage under 2.7 times and free cash flow of over USD $1.55 billion forecast for 2025), positions the company for continued expansion.
The stock trades around 25 times forward earnings, reasonable for a dominant waste operator historically priced as high as 75 times. Though growth isn’t breathtaking, it’s consistent in a business with few competitors and reliable demand.
GFL Enviromental
GFL Environmental (TSX:GFL) is rapidly expanding and has garnered attention. You’ve probably seen the green GFL trucks and bins around your neighbourhood.
The company recently made headlines for selling the Environmental Services unit for CA D$8 billion, using proceeds to pay down debt and launch share buybacks. In Q1 2025, GFL reported revenue of CAD $1.56 billion, a rise of 12.5% year-over-year (9% including divestitures). Adjusted EBITDA was up 13.8%, and net leverage hit a record low of 3.1 times.
GFL trades at about 91 times forward earnings, reflecting high investor expectations. The company is only recently profitable and carries significant debt. While its growth momentum and consolidation strategy are strong, the valuation leaves little margin for error. It may pay to wait for a better entry point unless you believe in its aggressive expansion thesis wholeheartedly.
The Foolish takeaway
Waste Connections offers steady mid-single-digit growth, disciplined M&A, and reasonable valuation. GFL is the faster grower and consolidator, but greener companies often have bumpy roads and premium valuations.
Both are among the few Canadian growth stocks that truly turn trash into profit. You won’t find them paying big dividends, but reinvesting earnings smartly can deliver long-term returns. If you’re bullish on sustainable, essential businesses, these deserve a hard look, with maybe a watchful eye on valuation.
