We recently compiled a list of the 12 Most Promising Green Stocks According to Hedge Funds. In this article, we are going to take a look at where Waste Management, Inc. (NYSE:WM) stands against the other most promising green stocks according to hedge funds.
President Donald Trump has signed an executive order directing the United States to withdraw from the Paris climate agreement, which is a significant blow to worldwide efforts to combat global warming. The order, signed on Trump’s first day in office after being sworn in for a second term, marks the second time the US has withdrawn from the agreement, having previously done so in 2017. The Biden administration had previously submitted a plan to cut US greenhouse gas emissions by more than 60% by 2035, but Trump’s withdrawal from the Paris Agreement has threatened to undermine these efforts.
On 20 January, The Guardian reported that the global financial sector is witnessing a significant shift away from its commitment to net zero emissions, as banks, asset managers, and industry groups move to accommodate the Trump administration’s anti-net zero stance. At the center of this shift are two key initiatives: The Glasgow Financial Alliance for Net Zero (GFANZ) and The Net Zero Asset Managers (NZAM) initiative.
GFANZ, a global coalition of financial institutions, was launched in 2021 at the COP26 climate conference in Glasgow, Scotland, with the goal of mobilizing the trillions of dollars needed to deliver the goals of the Paris Agreement. The alliance had set a goal of achieving net-zero emissions by 2050, and its members had committed to aligning their financing activities with the goals of the Paris Agreement. However, in a significant reversal, GFANZ has abandoned its requirement that members be aligned with the Paris Agreement, following a series of withdrawals by major US banks.
READ ALSO: 12 Cheapest Stocks with Biggest Upside Potential and Top 10 Undervalued Tech Stocks to Buy According to Hedge Funds.
The Net Zero Asset Managers (NZAM) initiative, which includes some of the world’s largest asset managers, has also been impacted by the shift in the global financial sector. NZAM was launched in 2020 with the goal of promoting net-zero investing and supporting the transition to a low-carbon economy. The initiative had gained significant momentum, with over 200 asset managers signing up to its principles and committing to align their investment portfolios with the goals of the Paris Agreement.
However, in recent weeks, NZAM has also suspended its monitoring of members’ progress towards their net-zero commitments, and has announced a review “to ensure NZAM remains fit for purpose in the new global context.” BlackRock, the world’s largest asset manager, has also quit the NZAM initiative, citing “confusion” over its membership. The departure of BlackRock, which manages over $11 trillion in assets, is seen as a significant blow to the initiative and has raised concerns about the ability of NZAM to achieve its goals.
The recent policy shifts and the wavering commitment of major financial institutions to net-zero goals represent significant setbacks in the global fight against climate change. However, sectors such as renewable energy and electric vehicles are expected to continue demonstrating resilience due to their cost-effectiveness, technology advancements, and economies of scale.
A worker sorting recyclable materials on a conveyor belt inside a Material Recovery Facility.
Our Methodology
To compile our list of the 12 most promising green stocks according to hedge funds, we used environmental ETFs plus online rankings to compile an initial list of 25 green stocks. We then used Insider Monkey’s Hedge Fund database to rank 12 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? 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).
Waste Management, Inc. (NYSE:WM)
Number of Hedge Fund Investors: 54
Waste Management, Inc. (NYSE:WM) is a leader in waste collection, disposal, and recycling services in North America. The company focuses on landfill gas-to-energy projects, recycling initiatives, and innovative waste reduction strategies. Waste Management, Inc. (NYSE:WM) plays a key role in minimizing environmental impact and promoting recycling.
Waste Management, Inc. (NYSE:WM) is making substantial investments in sustainability and renewable energy projects to drive growth and lessen its environmental impact. The company has pledged to invest approximately $3 billion in sustainability-related projects, including the development of renewable natural gas (RNG) projects, recycling facilities, and other initiatives. These investments are expected to contribute to significant earnings growth and free cash flow, with the company forecasting $800 million in EBITDA from these initiatives by 2027.
Waste Management, Inc. (NYSE:WM) is also leveraging technology and automation to enhance its operations, improve efficiency, and lower costs. The company has integrated various technologies, such as automated routing systems, scheduling and planning tools, and advanced mapping systems, to optimize its collection and disposal processes. Additionally, Waste Management, Inc. (NYSE:WM) has automated over 800 routes in its residential fleet to reduce labor reliance and boost performance. These technological investments are expected to drive margin growth and operational efficiency, with the company aiming to significantly lower operating expenses as a percentage of revenue.
Waste Management, Inc. (NYSE:WM) is also pursuing strategic acquisitions to broaden its service offerings and expand its market presence. On November 4, the company completed the acquisition of Stericycle, a leading provider of medical waste management services. This acquisition is anticipated to enhance the company’s business portfolio, generate synergies, and promote growth through expanded service offerings.
Overall WM ranks 5th on our list of the most promising green stocks according to hedge funds. While we acknowledge the potential of WM 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 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 Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
