In this article, we will take a look at the 10 best waste management stocks to buy according to analysts.
The waste management industry is experiencing robust growth as industrialization and urbanization gather steam. Positive trends in government regulations and the use of advanced technologies in waste management are also fueling growth. According to Grand View Research the industry was valued at $1.29 trillion in 2022 and is projected to grow at a compound annual growth rate of 5.4% from 2023 to 2030.
The growth is expected to gather pace due to stringent government regulations pertaining to resource conservation and waste shipment regulation to improve service delivery. Escalating waste volumes from medical facilities industries to residential settings due to urbanization are also expected to impact the sector positively. The sector is also supported by factors such as the growth of smart cities and the rising use of integrated waste management systems.
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The surge in hazardous waste is one of the factors strengthening the prospects of waste management companies. America has consistently topped the charts as the most wasteful country in the world, with over 239 million metric tons of garbage every year. While most people might perceive it as a threat to the environment and society, it presents a massive opportunity for waste management companies.
“It’s a profitable industry,” according to Debra Reinhart, a Board of Scientific Counselors member for the EPA. “It’s a difficult industry, but it is profitable if it’s done right.”
Consequently, advanced waste disposal methods and techniques have emerged as a result of growing awareness about proper waste disposal to preserve the health of humans and animals. Waste management companies must dispose of or recycle waste on time due to the presence of large quantities of hazardous compounds, including metals and salts.
The growing demand for efficient solid waste management frameworks and strategies that prioritize public security and economic development is a welcome for waste management companies. For starters, it’s made it possible for companies to hike prices for their services, citing their efficient solid waste management systems. The price increases have resulted in robust revenue growth and improved profit margins, allowing waste management companies to generate more shareholder value.
As long as there are people and companies who see trash as a resource rather than waste, the solid waste management sector will only keep growing. As governments worldwide agitate for a safe environment free of hazardous or other waste materials, companies engaged in waste management will always record booming business.
Similarly, as the US economy steers from recession following the Federal Reserve cutting interest rates for the second time, booming industrial activity is expected, resulting in more waste generated by factories. Likewise, consumer purchasing power has also been boosted, given the low interest rates in play, which should result in more waste volume due to increased spending on various items.
Consequently, waste management companies are on the cusp of booming business due to higher waste volumes. With most hiking prices amid limited opposition, now would be the best time to closely watch the best waste management stocks to buy as they are well poised to generate long-term value.
Source: Pexels
Our Methodology
To compile the list of the best waste management stocks to buy according to analysts, we scanned the stock market for companies engaged in all kinds of waste management. We then settled on waste management stocks that Wall Street analysts believe are well poised to explode backed by solid underlying fundamentals. Upon analyzing hedge fund sentiment and holdings, we ranked the stocks in ascending order based on their upside potential, as of November 22.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Waste Management Stocks to Buy According to Analysts
10. Waste Management, Inc. (NYSE:WM)
Market cap as of November 22, 2024: $88.91 Billion
Number of Hedge Fund Holders: 54
Stock Upside Potential: 1.33%
Waste Management, Inc. (NYSE:WM) is a leading provider of waste management services specializing in collecting and transporting waste and recyclable materials to transfer stations, material recovery facilities or disposal sites. The company has demonstrated strong operational performance, with its financial results meeting expectations for the better part of the year.
Waste Management, Inc. (NYSE:WM) stands out as one of the best waste management stocks to buy owing to its strong pricing power in the waste management sector. Pricing power allows the company to offset cost inflation and, most importantly, drive margin expansion. The company’s ability to maintain stable operations even during economic fluctuations also underscores its ability to generate long-term value.
The stock’s sentiments were significantly boosted when Waste Management, Inc. (NYSE:WM) delivered solid third-quarter results on October 28, 2024, which affirmed the strength of its waste management operations. Revenue in the quarter was up 7.9% year over year to $5.6 billion, driven by solid execution on pricing. Adjusted earnings were also up by 11% to $1.88 a share. Additionally, Waste Management grew its cash from operations for the first three quarters of the year by 16% and is on course to achieve $2.15 billion in free cash flow by the end of the year.
9. Casella Waste Systems, Inc. (NASDAQ:CWST)
Market cap as of November 22, 2024: $7.05 Billion
Number of Hedge Fund Holders: 28
Stock Upside Potential: 3.59%
Casella Waste Systems, Inc. (NASDAQ:CWST) is a vertically integrated solid waste services company that offers resource management services in solid waste collection. While the stock has outperformed the overall market by 31.47% year to date, management has been making strategic moves to bolster long-term prospects and strengthen its revenue base.
The company has already reached an agreement to acquire Royal Carting and Welsh Sanitation as it continues to expand its waste management operations. The acquisitions are expected to generate over $90 million in annualized revenues. Even though it anticipates a decrease in solid waste volume of 1-2%, it expects solid waste price growth at the upper end of 5% to 6%.
Casella Waste Systems, Inc. (NASDAQ:CWST) benefited from a 5.5% solid waste pricing increase in the third quarter going by its earnings report on October 30, 2024. Consequently, the company delivered a 16.7% increase in revenue as adjusted earnings increased 14.9% year over year to $102.9 million. The company has demonstrated strong revenue growth of 27.76% over the past 12 months. With a healthy gross profit margin of 34.22%, the business is effectively managing costs in relation to revenue, affirming why it is one of the best waste management stocks to buy.
Here is what Alger Weatherbie Specialized Growth Fund said about Casella Waste Systems, Inc. (NASDAQ:CWST) in its first quarter 2024 investor letter:
“Casella Waste Systems, Inc. (NASDAQ:CWST) is a regional, integrated solid waste management services company that provides collection, transfer, landfill disposal, and recycling services primarily in secondary markets throughout the northeastern U.S. During the quarter, shares contributed to performance after the company reported strong fiscal fourth quarter results, as revenues grew 32% year-over-year. Solid waste revenues during the quarter were also strong, as steady price increases offset a slight decline in volumes. Further, management provided forward guidance that met analyst estimates, as management believes margins should continue to improve going forward. We believe Casella is well positioned for long-term growth, driven by strong pricing power, an attractive landfill footprint across the northeast U.S., and further expansion into the mid-Atlantic region.”
8. Republic Services, Inc. (NYSE:RSG)
Market cap as of November 22, 2024: $67.03 Billion
Number of Hedge Fund Holders: 45
Stock Upside Potential: 4.72%
Republic Services, Inc. (NYSE:RSG) is an industrial company that collects and processes recyclable solid waste and industrial waste materials. The company has carved a niche as one of the best waste management stocks, going by the 29.78% year-to-date gain owing to its commitment to sustainability and innovation. The company has also embarked on an aggressive acquisition strategy that has seen it acquire Advanced Chemical Transport LLC and Central Texas Refuse, LLC, bolstering its prospects in the environmental solutions sector.
One of Republic Services, Inc.’s (NYSE:RSG) strong points has been the Environmental Solutions division, which has shown excellent margin performance, a sign of efficient operations and cost control. The company delivered impressive third-quarter results on October 29, 2024, as it benefited from strong pricing ahead of cost inflation and on the back of effective cost management.
Revenue in the quarter was up by 6.5% to $4.08 billion, including 4.2% organic growth and 23% from acquisitions. Net income also rose to $565.7 million or $1.80 a share from $480.2 million or $1.52 a share delivered the same quarter last year. The solid financial results affirm Republic Services, Inc. (NYSE:RSG)’s well-designed strategy expected to drive sustainable growth while creating shareholder value.
ClearBridge Investments stated the following regarding Republic Services, Inc. (NYSE:RSG) in its Q2 2024 investor letter:
“We added two new names to the portfolio in the quarter. Republic Services, Inc. (NYSE:RSG) is a waste disposal company in the industrial sector whose services include non-hazardous solid waste collection, waste transfer, waste disposal, recycling and energy services. It is a stable-through-the-cycle compounder in a consolidated industry. The company’s end market is resilient, which gives us some confidence in the stability of its earnings through a recession. In the next few years, cash flow should grow at the high end of the range as Republic Services benefits from high-returning sustainability investments in polymer recycling and renewable natural gas, which also improve the company’s emission and circularity profile.
Republic Services continues to set ambitious goals around sustainability targets, such as increasing its renewable energy generation by 50% through the beneficial reuse of biogas. In addition, its 74 recycling centers process five million tons of materials per year and include a major polymers centre for plastics. Notably, it is the first North American waste and recycling company with an emissions reduction goal approved by the Science-Based Targets initiative (SBTi).”
7. Waste Connections, Inc. (NYSE:WCN)
Market cap as of November 22, 2024: $48.77 Billion
Number of Hedge Fund Holders: 48
Stock Upside Potential: 6.15%
Waste Connections, Inc. (NYSE:WCN) is one of the best waste management stocks to buy, specializing in providing non-hazardous waste collection, transfer, disposal, and resource recovery services. While the company offers collection services to residential, commercial, municipal, industrial, and exploration and production (E&P) customers, its stock is up by 27.17% year to date.
The outperformance stems from Waste Connections, Inc. (NYSE:WCN) actively engaging in mergers and acquisitions that have increased its market share and service offerings. This includes the purchase of Lone Star Disposal, LP, and a significant participant in Texas’ waste management market. Progressive Waste Solutions is also a part of it. The solid pipeline of acquisitions and mergers is expected to contribute $700 million worth of annualized revenue.
Waste Connections, Inc. (NYSE:WCN)’s long-term prospects remain intact, given that waste management is a necessary service with consistent demand that generates a steady flow of income. It delivered better-than-expected third-quarter results on October 23, 2024, with revenue increasing 13.3% year over year as adjusted earnings increased 17.3% to $787.4 million. Net income per share came in at $1.19 and adjusted EBITDA margin improved 120 basis points to 33.7%. The solid results came against the backdrop of solid pricing supplemented by incremental acquisition contribution.
6. Clean Harbors, Inc. (NYSE:CLH)
Market cap as of November 22, 2024: $13.48 Billion
Number of Hedge Fund Holders: 44
Stock Upside Potential: 7.47%
Clean Harbors, Inc. (NYSE:CLH) is a waste management company that collects, transports, treats and disposes hazardous and non-hazardous waste. It also deals in landfill disposal and wastewater treatment. The stock has outperformed the overall market by a 46.52% year-to-date gain, attributed to its strong market position and successful adaptation to sector demands.
The outperformance in the first half of the year was fueled by high demand in the Environmental service segment. Clean Harbors, Inc. (NYSE:CLH) also benefited from the contributions of its recent acquisition, HEPACO. The outperformance continued in the third quarter as the company delivered profitable growth in its operating segments on October 30, 2024.
Revenue in the quarter grew 12% year over year to $1.53 billion as income from operations increased 25% to $192.3 million. Net income was up 26% to $115.2 million. The strong performance comes from the Environmental Services (ES) segment’s underlying demand remaining strong. Safety-Kleen Sustainability Solutions’ (SKSS) segment results showed softer-than-expected base oil and lubricant demand and pricing throughout the quarter, with a more significant decline in September despite higher Adjusted EBITDA.
Consequently, the company expects its full-year EBITDA to range between $1.10 billion and $1.12 billion, representing 10% year-over-year growth. It also expects free cash flow to range between $280 million and $320 million.
Here is what Merion Road Capital said about Clean Harbors, Inc. (NYSE:CLH) in its first quarter 2024 investor letter:
“During the quarter, I uncharacteristically built a position from nothing into our top holding. Clean Harbors, Inc. (NYSE:CLH) is the largest US hazardous waste management company. Before digging into CLH, I would like to diverge with a bit of personal history. In my early 20s, I worked at Macquarie Bank, where our team was responsible for acquiring investments on behalf of our managed infrastructure funds and the bank’s balance sheets. One of my first assignments was the acquisition of a publicly traded municipal solid waste (MSW) management company (Waste Industries). While not technically infrastructure per-se, MSW has similar characteristics like being an essential service, operating regional monopolies, and controlling scarce assets. In any case, we paid something like 8-9x EBITDA, which was a premium to the then trading multiple. Waste Industries is now a small part of GFL Environmental, which trades at 12x EBITDA. And GFL is actually at a notable discount to its peers of Waste Management, Republic Services, and Waste Connections, which are at 15x. While hindsight is 20/20, buying into this asset class 15 years ago would have been a home run given their strong cash flow and multiple expansions.
While hazardous waste is not entirely comparable to their MSW brethren, CLH has many attractive attributes. They own and operate scarce assets, including nine incinerators and eight landfills, where a complex permitting process and significant construction costs limit new supply. They maintain vertically integrated operations that allow it to control waste from collection through transportation and disposal; this activity similarly requires specialized permits for which the company holds over 500. As the largest player in the space, CLH has a proven history of managing waste properly – a key consideration amongst customers given environmental ramifications. They also have scale benefits that include route-based efficiencies, capacity utilization, and the deepest breadth of service offering…” (Click here to read the full text)
5. Perma-Fix Environmental Services, Inc. (NASDAQ:PESI)
Market cap as of November 22, 2024: $234.41 Million
Number of Hedge Fund Holders: 7
Stock Upside Potential: 48.55%
Perma-Fix Environmental Services, Inc. (NASDAQ:PESI) has affirmed its status as one of the best waste management stocks to buy, going by the 92.34% year-to-date gain. The rally comes on the company confirming its status as a nuclear services company and a leading provider of nuclear and mixed waste management services. Its nuclear waste services include managing and treating radioactive and mixed waste for hospitals, research labs and institutions.
Perma-Fix Environmental Services, Inc. (NASDAQ:PESI) has been flying high as investors react to remarkable growth made possible by the company’s strategic initiatives and operational innovations. The initiatives have established Perma-Fix Environmental Services as a prominent participant in the market and drawn the interest of investors seeking stable returns in the environmental sector.
The stock sentiments have received a significant boost following the successful launch of the company’s commercial Perma-FAS system for destroying PFAS (Per- and Polyfluoroalkyl Substances) at its Florida facility. The system demonstrated over 99.99% effectiveness in breaking down PFAS ‘forever chemicals.’
With several expansion projects underway, such as implementing cutting-edge PFAS technology, Perma-Fix Environmental Services, Inc. (NASDAQ:PESI) is making headway and anticipates big things in the years to come. The company anticipates playing a significant role in waste treatment with a potential revenue stream of 1.5 million gallons annually. Despite the setbacks, Perma-Fix is concentrating on expansion projects like new service procurements, global waste programs, and PFAS technology.
Here is what Long Cast Advisers said about Perma-Fix Environmental Services, Inc. (NASDAQ:PESI) in its first quarter 2024 investor letter:
“MTRX, Perma-Fix Environmental Services, Inc. (NASDAQ:PESI) and QRHC were the biggest contributors to returns in the quarter. During the quarter, we reduced our positions in DAIO and PESI. Same as last quarter, our top five holdings at quarter end were MTRX, CCRD, QRHC, PESI and RSSS, and same as last quarter, our concentrated ownership of these companies means price changes in these stocks will have an overweight impact on our overall portfolio.
Though it remains a top holding, I’ve lightened our position in PESI, hewing to the investment philosophy that one should buy the page 16 story and sell the cover story. Late February saw a Barron’s cover story on PFA’s ie “forever chemicals.” Two weeks later, on PESI’s year-end conference call, the company announced that it had discovered a safe and cost-effective solution for getting rid of them. It’s the kind of announcement that can really get investors’ hearts aflutter.
So why did I sell some? With an R&D budget just $2.5M total over the last four years, it doesn’t seem reasonable that PESI has solved an allegedly $100B issue, or were their solution indeed scalable, how defensible it might be. On the same conf call, the company forecast a paltry 1H24, driven by a gap between the completion of large projects and the beginning of new ones. Anticipating a potentially negative market reaction to this, I wanted to preserve capital to add more shares later.
This short-term investment decision is heavily biased by our recent experience with CCRD, which I did not sell ahead of a well-telegraphed decline in earnings. Maybe I am “fighting the last battle.” Investing is full of uncertainty and best guesses, and every decision is its own hypothesis. In a few weeks, when PESI reports 1Q24 earnings, we will know the outcome. I generally operate under the assumption that doing nothing is usually the best option, and I probably will end up there again, but it made sense at the time. PESI remains a large position commensurate with what I think will be a large long-term opportunity beginning in 2025.”
4. Montrose Environmental Group, Inc. (NYSE:MEG)
Market cap as of November 22, 2024: $645.54 Million
Number of Hedge Fund Holders: 18
Stock Upside Potential: 94.47%
Montrose Environmental Group, Inc. (NYSE:MEG) is one of the best waste management stocks to buy, as it offers end-to-end solutions for addressing environmental issues. Its Measurement and Analysis segment tests and analyzes air, water, and soil to determine concentrations of contaminants.
Montrose Environmental Group, Inc. (NYSE:MEG) is experiencing strong demand for its comprehensive suite of integrated solutions, which have been the catalyst behind solid performance and record results. The 190 basis points of margin improvement, record quarterly revenues, and consolidated adjusted earnings in the third quarter underscore the alignment of in-demand, higher-margin products with financial and strategic objectives.
Montrose Environmental Group, Inc. (NYSE:MEG) reported results for Q3 2024 on November 6 and logged a revenue of $178.7 million, a 6.4% increase over the year before. The company’s record Consolidated Adjusted EBITDA of $28.3 million reflected strong organic growth and successful acquisitions. With an emphasis on strategic capital allocation, deleveraging, and cash flow generation, Montrose reiterated its 2024 revenue guidance.
Baron Discovery Fund stated the following regarding Montrose Environmental Group, Inc. (NYSE:MEG) in its Q2 2024 investor letter:
“Montrose Environmental Group, Inc. (NYSE:MEG) a leading environmental solutions provider (consulting, testing and remediation), outperformed during the quarter. The company reported a solid quarter driven by strong organic growth as the company is benefiting from both secular trends as well as regulatory tailwinds. During the quarter, the EPA finalized the maximum contaminant levels for PFAS (a so-called “forever chemical”) in water supplies which is expected to be a catalyst for increased remediation spending. Montrose is likely to benefit as it has proprietary equipment to enable PFAS remediation. Adding to organic growth prospects, Montrose sees a robust market for acquisitions and the company did a small equity raise early in the quarter to execute on opportunities. We believe that Montrose can generate over 20% cash flow growth per year for the next several years.”
3. Quest Resource Holding Corporation (NASDAQ:QRHC)
Market cap as of November 22, 2024: $145.14 Million
Number of Hedge Fund Holders: 6
Stock Upside Potential: 95.04%
Quest Resource Holding Corporation (NASDAQ:QRHC) is a waste and recycling services company that provides solutions for the reuse, recycling, and disposal of various waste streams and recyclables. The company provides waste and recycling solutions to some of the biggest companies, including Fortune 1000 firms from which it generates most of its revenues.
Likewise, Quest Resource Holding Corporation (NASDAQ:QRHC) has been securing big contracts and winning new clients, strengthening its revenue base. Strong demand from current clients and the onboarding of new clients contributed about $16 million to the company’s Q3 2024 revenue. However, isolated client attrition and less-than-expected conditions at some clients in industrial end markets partially offset growth.
Overall, revenue was up 3.3% year over year and amounted to $72.8 million. Strong demand for waste management and recycling solutions was the catalyst behind this growth. Even though the company’s net loss widened to $0.16 a share compared to $0.10 a share delivered in the same quarter last year, the company is focused on ramping up new business and increasing efficiencies.
2. Enviri Corporation (NYSE:NVRI)
Market cap as of November 22, 2024: $572.17 Million
Number of Hedge Fund Holders: 23
Stock Upside Potential: 124.09%
Enviri Corporation (NYSE:NVRI) provides environmental solutions for industrial and specialty waste streams. Its Clean Earth segment provides specialty waste processing, treatment, recycling, and beneficial reuse solutions for waste needs, such as hazardous, non-hazardous, and contaminated soils and dredged materials.
The waste management company delivered mixed second-quarter results on October 31, 2024, with revenues coming in at $574 million, supported by 1% organic growth. The company also achieved $37 million in operating income and $85 million in adjusted earnings, up 3% year over year. Nevertheless, it also posted a diluted net loss of $0.01 a share, hurt by the impact of the Reed Minerals sale.
On the other hand, its clean air segment emerged as a bright spot in achieving record quarterly profits and margins driven by increased pricing and efficiency improvements. Enviri Corporation (NYSE:NVRI) has achieved enhanced financial flexibility by exceeding its asset sales target with the sale of Reed Minerals. Management is projecting enhanced cash flow increases that can increase shareholder value over time.
1. LanzaTech Global, Inc. (NASDAQ:LNZA)
Market cap as of November 22, 2024: $225.47 Million
Number of Hedge Fund Holders: 3
Stock Upside Potential: 243.86%
LanzaTech Global, Inc. (NASDAQ:LNZA) is a waste management company specializing in transforming carbon into fabrics and packaging. It also develops biocatalysts and processes to produce additional products utilizing novel biocatalysts, including acetone, isopropanol (IPA), and industrial solvents. The company has opened discussions with the US Department for Energy over a potential $200 million financial support to support its SECURE project aimed at sustainable ethylene production from captured carbon dioxide.
Even as it moves to enhance ethylene production from captured carbon dioxide, it has inked a master license agreement with SEKISUI to develop waste-to-ethanol plants across Japan. The agreement aligns with the company’s vision for a circular carbon economy. It has also launched CirculAir™, a new technology with LanzaJet designed to enhance sustainable aviation fuel (SAF) production.
LanzaTech Global, Inc. (NASDAQ:LNZA) has increased its ownership stake in LanzaJet from approximately 23% to 36%, aligning with its strategy to capitalize on the growing demand for SAF. It also hopes to raise up to $150 million, enabling it to profit without issuing more debt or equity. The company has more cash than debt, giving it some financial stability.
While we acknowledge the potential of LNZA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LNZA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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