The 7 Best ‘Waste’ Stocks for Dumpster-Diving Investors

Although waste stocks to buy might not represent the first avenue for most investors seeking profits in a possibly resurgent market cycle, it might be among the most logical. With the pace of inflation slowing, consumer spending may rise relative to last year. If so, greater consumption would translate to more waste products, bolstering the dumpster-diving sector.

Another factor that could potentially lift waste management stocks centers on the lack of alternatives. Just because you throw your trash products per their appropriate compartments, the act itself doesn’t really mean anything. Companies in this specialty must still pick up your rubbish and dispose of it some way, somehow.

Plus, this particular segment of the management industry covers many areas, from residential trash to wastewater services. Fundamentally, it’s a permanently relevant sector – appropriate for both good times and bad. On that note, below are waste management stocks to consider.

Waste Management (WM)

Obviously, we can’t have a discussion about waste management stocks without mentioning Waste Management (NYSE:WM). As with other publicly traded securities, WM didn’t enjoy the best performance in 2022. Presently, shares gained only a bit more than 1% in the trailing year. Nevertheless, that’s a much better performance than the benchmark S&P 500, which dropped nearly 10% during the same period.

Fundamentally, this slow-and-steady approach symbolizes why investors appreciate Waste Management. Whether a bull market, bear market or something in between, people will continue to generate waste products. Someone has to step in and take care of the constant buildup, providing predictability in the company’s revenue channels.

Presently, Wall Street analysts rate WM as a consensus hold, which doesn’t particularly sound encouraging. However, their average price target of $169.20 implies nearly 11% upside potential. Even better, hedge fund sentiment rates as very positive. Therefore, investors should look into WM as one of the waste management stocks to buy.

Waste Connections (WCN)

Providing garbage pickup and dumpster rental services for businesses in the U.S. and Canada, Waste Connections (NYSE:WCN) should enjoy significant upside if the broader economy normalizes. If not, the company will still command relevance, which makes waste management stocks such an intriguing idea. What’s more, WCN specifically gained over 5% in the trailing year, underscoring its demand predictability.

According to Gurufocus.com’s proprietary calculations for fair market value, WCN rates as significantly undervalued. Objectively, the company’s three-year revenue growth rate stands at 8.1%, beating out over 60% of the competition. On the bottom line, Waste Connection’s net margin pings at 11.6%, above 75% of sector players. About the only major weakness is its balance sheet, which overall features middling stability.

Nevertheless, perhaps the most important takeaway centers on Wall Street’s assessment. Per covering experts, WCN rates as a consensus (and unanimous) strong buy. Also, their average price target implies potential upside of 15%, making WCN one of the waste management stocks to consider.

Republic Services (RSG)

A competitor to Waste Management and Waste Connections in the disposal service segment, Republic Services (NYSE:RSG) did take a hit compared to other companies in the field. In the trailing year, RSG slipped 3% of equity value. However, in the past five years, RSG shot up 81.5%, beating out the former two waste management stocks.

Per Gurufocus.com’s proprietary FMV calculations, RSG features a modestly undervalued profile. To be fair, sales growth slipped in 2020, impacting the longer-term trajectory. However, in the third quarter of 2022, Republic posted revenue of nearly $3.6 billion, up roughly 23% against the year-ago period. Moreover, the company enjoys solid profit margins. In particular, its net margin of 11.2% beat out over 73% of its rivals.

Presently, Wall Street analysts rate RSG as a consensus moderate buy. Conspicuously, their average price target implies upside potential of almost 18%. That’s quite robust for waste management stocks, making it worthy of consideration.

Clean Harbors (CLH)

Headquartered in Norwell, Massachusetts, Clean Harbors (NYSE:CLH) provides environmental and industrial services, including hazardous waste disposal for companies. The enterprises Clean Harbors serve include Fortune 500 entities, small waste generators and federal, state, provincial and local governments. If you think it’s a relevant business, you’d be right. In the trailing year, CLH gained a whopping 38%.

Better yet, it’s still going strong, moving up 12% in the year so far. Now, because of the enormous price hike, Gurufocus.com rates CLH as fairly valued. Still, it offers some potent stats. For instance, the company’s three-year free-cash-flow (FCF) growth rate stands at 20.8%, exceeding over 67% of industry competitors. Also, its return on equity (ROE) of over 23% reflects an extremely high-quality business enterprise.

Currently, Wall Street analysts rate CLH as a consensus strong buy. It would have been unanimous save for one hold rating. Also, their average price target of $140 implies upside potential of 10%. Thus, it still has legs as one of the waste management stocks to buy.

Ardagh Metal Packaging (AMBP)

A leading global supplier of sustainable, infinitely recyclable, metal beverage cans to brand owners, Ardagh Metal Packaging (NYSE:AMBP) might not be a household name here in the U.S. However, as global populations rise and broader consumption habits increase, sustainability will become a critical issue. To be sure, investors didn’t see it that way in 2022, with AMBP losing 42% in the trailing year. Still, in the new year, it’s up almost 11%.

On the fiscal side, Ardagh carries notable risks. Objectively, the market prices AMBP at nearly 15-times forward earnings. That’s conspicuously higher than the industry median of 12 times. Also, its balance sheet could use some work. Nevertheless, on the optimistic front, Ardagh’s ROE stands at a stratospheric 65%. This indicates superior capacity to convert equity financing into profits.

Presently, Wall Street analysts rate AMBP as a consensus moderate buy. Just as importantly, TipRanks notes that hedge fund sentiment for Ardagh pings as very positive. For risk takers, AMBP could be one of the waste management stocks to buy.

Core & Main (CNM)

Based in Missouri, Core & Main (NYSE:CNM) is a leading specialized distributor of water, wastewater, storm drainage and fire protection products, and related services in the U.S. At the moment, the company operates approximately 300 branches nationwide. Despite relevancies as one of the indirect waste management stocks to buy, CNM slipped nearly 10% in the trailing year.

However, that doesn’t appear to be the main storyline for Core & Main. In the year so far, CNM gained 11% of equity value. Even better, the company enjoys a series of attractive fiscal attributes. First, its three-year revenue growth rate stands at 15.5%, above over 85% of the competition. Second, it’s a profitable enterprise, featuring a net margin of 5.52% (above 65% of rivals).

As a bonus, the market prices CNM at a forward multiple of 10. In contrast, the sector median pings at 14.8. Finally, Wall Street analysts rate CNM as a consensus moderate buy. Their average price target implies upside potential of nearly 29%, making CNM one of the waste management stocks to consider.

Quest Resource Holding (QRHC)

While a relative unknown among waste management stocks, Quest Resource Holding (NASDAQ:QRHC) deserves closer examination. Per its website, Quest Resource manages companies’ operational waste streams by delivering tailored waste solutions that increase efficiencies, maximize landfill diversion, improve their bottom line and help meet business and sustainability goals. In the trailing year, QRHC gained slightly over 5%.

Even more impressive, since the January opener, QRHC jumped up 10%. To be sure, prospective investors will require significant belief in the underlying narrative. For instance, the company’s Altman Z-Score sits in the distressed zone. As well, on a trailing-12-month basis, Quest’s net margin is in negative territory.

Still, that’s not the whole story. Currently, the market prices QRHC at a forward multiple of 14.14. And it also prices shares at a trailing sales multiple of 0.48. Both stats come in under their respective sector median values. Finally, Wall Street pegs QRHC as a consensus moderate buy. Further, with an average price target of $12.50, the implication is that shares will nearly double from here.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.