FR: 1 Stock Tony Soprano Would Love

Article: 1 Stock Tony Soprano Would Love

Up next in my “Fool Revisited” series was a piece about Waste Management (NYSE: WM), the largest (by market cap) of the “waste management” companies out there. It is perhaps the most well-known as well, and the fact that its entire industry carries its name should be indicative of why it is considered an industry leader.

This article was probably another sector article, written after we discussed “industrial goods,” of which waste management was a sub-sector. My little too clever title notwithstanding, the article is a generally positive look at the company circa 2011, based primarily on the company’s 10-K for the prior year. It compares the “players” in the trash industry, with special emphasis on Veolia Envirronement, a French company that does similar things in Europe.

Here’s the ancient tweet announcing my article back in the day:

Had an investor purchased and held onto Waste Management after the publication of my article – which was generally positive about the company’s prospects  – they would have handily beat the return of an S&P 500 index fund. The compound annual growth rate (CAGR) and total growth of Waste Management exceeded the S&P 500 by a pretty substantial margin from article publication (September 12, 2011) through January 12, 2018:

Stock Start Price End Price CAGR Total Growth Value of $10,000
Waste Management $25.21 $88.27 21.86% 250.14% $35,014
S&P 500 $1,162.27 $2,876.24 15.36% 147.47% $24,747

Source: Yahoo! Finance & author calculation; Stock prices include dividends & stock splits

As mentioned in the article, a lot of the services Waste Management provides are very utility-like, which enables them to continue to do well despite lower commodities costs of the items they sell from recycling. They also have benefited from a fairly robust dividend over the past few years, though the growth of the stock has outpaced the growth of the dividend – which has grown by 25% since the article was originally published – pushing down the yield over time.

I personally wouldn’t buy shares now without further research, but the growing dividend and moat protection for the company do make it a candidate for more in-depth research. This company should come up in this series later as well, as I know that there was a time I did own shares because of these reasons.

Until next time…

Disclaimer: I do not own currently own shares in Waste Management. I also have no plans to purchase shares within the next 60 days in any account in which I manage investment funds. You can read a little about my personal investment philosophy here.

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