1. Waste Management, Inc. (NYSE:WM)
Number of Hedge Fund Investors: 67
The Best Waste Management Stock, Waste Management, Inc. (NYSE:WM) is a waste collection and disposal sector leader. It has a dominant market share and unrivaled landfill ownership, which is nearly impossible to reproduce given the immense legal constraints. This dominant position grew following the business’s October 2020 acquisition of Advanced Disposal, the fourth-largest publicly traded waste collection and disposal company in the United States.
In November 2024, Waste Management, Inc. (NYSE:WM) bought Stericycle, North America’s largest medical waste management company, for $7.2 billion. The acquisition adds a high-potential new market to the firm’s portfolio and could be its most significant growth catalyst.
Waste Management, Inc. (NYSE:WM)’s success is driven by the nature of its business, the size and scale of its operations, and effective capital allocation. As an industry leader, it benefits from economies of scale. The company can produce recession-proof revenues and steady cash flows since waste management is not affected by economic cycles. It then uses these funds wisely to expand and compensate shareholders.
Waste Management, Inc. (NYSE:WM) has increased its dividend for 22 consecutive years, with a compound annual growth rate (CAGR) of around 6% over the last five years. Dividend raises have substantially boosted shareholders’ total returns over the years. The stock has more than doubled investors’ money in five years and provided incredible profits in ten years.
The business reported strong figures for 2024, with 8.01% revenue growth year over year, and this year, it anticipates approximately 18% growth in free cash flow at the midpoint of its target range.
Diamond Hill Large Cap Concentrated Fund stated the following regarding Waste Management, Inc. (NYSE:WM) in its Q4 2024 investor letter:
“As valuations have continued rising and the economic cycle has gotten relatively long in the tooth, we’ve thought carefully about where and how we are exposed to more cyclical stocks. As such, we initiated just three new positions in Q4: Berkshire Hathaway, Aon and Waste Management, Inc. (NYSE:WM).
Waste Management is one of the US’s largest providers of waste-collection services. Its leading footprint of landfill assets provides the company with long-term pricing power. Further, Waste Management has invested heavily in recent years in recycling and renewable natural gas projects — which we believe the market is underappreciating given the value these investments will create as the projects wind down and come online.”
Overall, Waste Management, Inc. (NYSE:WM) ranks first on our list of the 12 Best Waste Management Stocks to Invest In Now. While we acknowledge the potential for WM to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than WM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks to Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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