Environmental Services Sector

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Waste Connections (WCN) - >>> Take out the trash -- and add it to your portfolio


Motley Fool


https://www.fool.com/investing/2020/09/19/with-oil-crashing-again-these-3-stocks-are-buys/


Scott Levine - Waste Connections - Serving more than 7 million customers, Waste Connections dubs itself the "premier provider of solid waste collection, transfer, recycling and disposal services in mostly exclusive and secondary markets across the U.S. and Canada."

Over the past 10 years, Waste Connections has risen steadily. What has delighted investors over the past decade and led them to pick up shares of Waste Connections? For one, the company has demonstrated proficiency at growing both the top and bottom lines. While Waste Connections reported revenue of $1.3 billion and net income of $135 million in 2010, the company has consistently grown both metrics, resulting in it reporting sales and net income of $5.4 billion and $567 million, respectively, in 2019. The cash flow statement also demonstrates the company's adeptness at finding the treasure in others' trash. Over the past 10 years, Waste Connections has increased its operating cash flow from $328 million to $1.54 billion, representing an impressive compound annual growth rate (CAGR) of 18.8%. Similarly, the company has also excelled at generating free cash flow, increasing it from $194 million to $874 million -- a CAGR of 18.2%.

It's not only the company's past performance that is encouraging; management's guidance for 2020 -- though slightly lower than 2019 -- demonstrates the company's resilience to the headwinds that the global pandemic presented. Waste Connections forecasts 2020 revenue of $5.3 billion, flat compared to 2019, and operational cash flow of about $1.36 billion -- approximately 1.2% below the $1.5 billion it reported last year.

Volatility in the oil market will likely remain in the near term, especially considering OPEC's recent downward revision of its 2020 and 2021 forecasts. Unlike the ups and downs that commodity-related businesses exhibit, waste collection is steady and not subject to the whims of the market and oil stocks, making Waste Connections a compelling choice for investors looking to avoid market turbulence.

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