Stock Pick: A Company Turning Garbage Into Gold

This company is the unsung hero quietly dominating over 60% of the garbage market. While markets jitter, this stock chugs along, delivering steady returns - a true, hidden gem for long term investors.

Today, we’re shining the spotlight on a company that might not get your heart racing at first glance but could be a quiet powerhouse for your long-term wealth: Waste Management, Inc. (WM). Yeah, you heard that right—garbage collection. Stick with us, because this "boring" business is anything but dull when it comes to building your nest egg. Let’s unpack why Waste Management is a great long-term pick.

Why Waste Management? The Peter Lynch Magic

If you’ve been with us for a while, you know we’re big fans of Peter Lynch, the legendary investor who taught us to love companies that fly under the radar. Lynch had a knack for spotting businesses so ordinary they’d make you yawn—think laundromats or funeral homes—but boy, did they deliver steady returns. He once said, “The best stock to buy is the one you already own, especially if it’s boring and nobody’s talking about it.” Waste Management fits that bill perfectly. I mean, what’s more unglamorous than picking up trash? Yet, it’s exactly the kind of essential, recession-resistant business Lynch would’ve loved.

Here’s the deal: no matter what’s happening in the world—tariffs spiking, markets wobbling, or headlines screaming chaos—people still need their garbage hauled away. That’s the beauty of Waste Management. It’s a company that keeps chugging along, delivering consistent growth even when the economy’s throwing curveballs. With tariffs making waves in April 2025, WM’s stock is up nearly 15% year-to-date¹ (as of this writing), outpacing the S&P 500’s -9.4% return (as of this writing).² Its low beta of 0.67 means it doesn’t get rattled by market swings, giving you a smoother ride.

The Financials: A Rock-Solid Foundation

Let’s talk numbers, because Waste Management’s financials are a breath of fresh air amongst a chaotic market. This company’s got the kind of stats that make long-term investors sleep easy at night.

• Return on Equity (ROE): 36.24% – This tells us WM is a pro at turning shareholder money into profits. For every dollar of equity, it’s squeezing out over 36 cents of earnings—way above average for most industries.

• Free Cash Flow: $2.159 Billion – WM’s generating serious cash, enough to fund its growth, pay dividends, and weather any surprises.

• Dividend Reliability: 1.44% Yield – With 22 straight years of dividend hikes, the latest to $0.825 per share quarterly, WM is a dream for income seekers. At a stock price around $229, you’re getting a steady paycheck while your investment grows.

• Revenue Growth: 13% Quarterly Jump – In Q4 2024, WM’s revenue hit $5.893 billion, up 13% from the year before. An impressive hustle for a company in a “mature” industry.

• Earnings Growth: 21.3% YoY - Earnings growth that outpaces revenue growth tells a strong story of doing more business while simultaneously cutting costs.

These numbers aren’t just flashy stats—they show a business that’s disciplined, profitable, and built to last. Even with $23.9 billion in debt, WM’s got a $3.5 billion credit facility with $2.1 billion untapped, so it’s got wiggle room to manage that load while planning to trim it down over the next 18 months.³

Growth That Keeps On Truckin’

Now, you might be thinking, “Okay, trash pickup is stable, but where’s the excitement?” Here’s where Waste Management surprises you—it’s not just sitting on its landfill laurels. The company’s got a smart growth playbook, and it’s playing it well.

Take its $7.2 billion acquisition of Stericycle in November 2024.⁴ That move brought medical waste and secure document shredding into WM’s wheelhouse, opening doors to the fast-growing healthcare sector. It’s like adding a new engine to an already reliable truck. Full-year 2024 revenue climbed 8% to $22.063 billion, fueled by price increases, Stericycle, and even higher prices for recycled materials.⁵

But it’s not just about buying other companies. WM’s leaning hard into sustainability, turning landfill gas into renewable energy with 102 projects and counting. As the world gets greener, WM’s ahead of the curve, and that’s a growth driver that could pay off big over the next decade. The waste management industry itself is set to grow from $980.7 billion in 2023 to $1,607.6 billion by 2032, according to Market.us, and WM’s poised to grab a hefty slice of that pie.

“We’re not just managing waste; we’re building a sustainable future,” says WM’s leadership on their sustainability page. That’s the kind of forward-thinking we want in a long-term pick.

A Moat Wider Than a Landfill

Here’s where Waste Management really shines: its competitive moat is massive. This isn’t a business where a scrappy startup can roll in and steal the show. WM’s got operations in every U.S. state, with a network of collection trucks, recycling centers, and landfills that’s tough to replicate. It’s like trying to build a new Amazon from scratch—good luck with that.

The company’s scooped up tons of small, local waste businesses over the years, giving it a sneaky advantage: over 62% market share in U.S. waste collection, based on 2022 data from Grand View Research. This kind of dominance is what keeps competitors at bay. Plus, its scale means lower costs per pickup, so WM can keep prices competitive while still raking in profits.

• Market Share Edge: Over 62% in waste collection, making WM the 800-pound gorilla in the room.

• Economies of Scale: Bigger network = lower costs = fatter margins.

• Sustainability Cred: Renewable energy projects make WM a darling for clean energy investors, adding another layer to its moat.

This moat isn’t just about size—it’s about being indispensable. Cities and businesses rely on WM to keep things clean, and that stickiness locks in revenue year after year.

Why It’s a Long-Term Winner

So, why should you consider Waste Management for your portfolio? Picture this: it’s 2035, and you’re sipping coffee, checking your investments. The market’s been up, down, and sideways, but WM’s still there, steadily growing, paying dividends, and maybe even powering your town with renewable energy from its landfills. That’s the power of a boring business done right.

Sure, there are risks—$23.9 billion in debt is nothing to sneeze at, and new regulations could bump up costs. But with $2.159 billion in free cash flow and a plan to deleverage, WM’s got the tools to handle it.⁶ Its P/E ratio of around 35 is a bit high, hinting at a premium price, but for a company with this kind of stability and growth, it’s a fair trade-off.

Keep in mind that its current debt levels exist due to acquiring companies and expanding its reach - a fair investment for future growing revenues. Furthermore, the PE ratio has likely baked in these acquisitions giving it an appearance of a premium price, but in reality, it’s poised to keep growing steadily.

“Invest in businesses any idiot could run, because someday one will,” Peter Lynch famously quipped. Waste Management’s straightforward model—pick up trash, recycle, repeat—is idiot-proof and built for the long haul.

Let’s Wrap It Up

Waste Management isn’t going to be the hot stock your buddy brags about at the barbecue. But that’s exactly why we love it. It’s the kind of pick that grows quietly in the background, delivering returns while you focus on life’s bigger adventures. With rock-solid financials, a knack for smart acquisitions, and a moat that’d make a medieval castle jealous, WM’s the kind of stock you buy, hold, and thank yourself for later.

So, what do you think? Ready to add a little garbage to your portfolio? Drop us a line on X or hit reply—we’d love to hear your take. Keep picking smart and investing wiser!

1. https://finance.yahoo.com/quote/WM/

2. https://finance.yahoo.com/quote/%5EGSPC/

3. https://finance.yahoo.com/quote/WM/key-statistics/

4. https://investors.wm.com/news-releases/news-release-details/wm-completes-acquisition-stericycle

5. https://finance.yahoo.com/news/waste-management-reports-q4-full-161941970.html

6. https://www.macrotrends.net/stocks/charts/WM/waste-management/free-cash-flow