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Strategies & Market Trends : Value Investing
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To: Spekulatius who wrote (49591)9/28/2012 12:51:10 PM
From: gcrispin  Read Replies (1) of 78740
 
I have liked trash stocks in the past, but sold out of them several years ago and look at them, at best, market performers.

I never owned CWST for several reasons. RSG and WM control roughly 70% of total domestic disposal capacity. Casella lacks the the ownership of a sizable network of landfills. If there is any moat to the trash business, it is to be vertically integrated,

Casella's footprint is almost entirely limited to the Northeast, not exactly a robust economic region. Their revenues have been steady to declining on a yearly basis since 2008. Here is a link to their financials from Nasdaq. It is pretty obvious why they trade at a discount to peers.

nasdaq.com

The company has increased its landfill space but at the expense of oppressive financial leverage. Now they are trying to dig their way out by selling assets, and raising capital. The current offering will be quite dilutive to the outstanding shares. But maybe that doesn't matter as they haven't consistently made money for the last five years.

A significant amount of their revenues come from recycling commodities business.

The Casella brothers own 100% of the Class B stock which entitles them to significant control over the company.

I don't own Waste Management. But at least you get a dividend. No dividend here. In fact I believe their covenants restrict them from offering a dividend.

So what am I missing? They have already sold substantial assets. What else is up for sale? Can you outline this turnaround since you bought this morning.
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