Started buying WM = Waste Management today at $31. Will add more every 3$ on down.
WM is the biggest trash-hauler in N. America:
271 landfills
98 recycling facilities
17 electrical plants burning gas from landfills
stock range: 21-40$ (2009 lo to 2011 hi); beta 0.6
market cap 15B
PE = 14 = 31/2.16, using 2011 EPS guidance; (LT range is 13-19)
P/S = 1.1 (LT range is 1.0-1.6)
gross margin stable in 36%-39% range since 2007
Div. Yield = 4.4% = (0.34 X 4)/31
In 2010: 604M$ paid in dividends, 501M$ in share repurchases
Share count fell 24%, from end-2001 to end-2010, or 2.7%/y
4.4% + 2.7% = 7.1%/y to shareholders
8.9B$ LT debt, 0.54B$ cash
WM fails my criteria for a dividend stocks
Message 27568042
on debt, and emerging market exposure. Stock is at the midpoint of 3Y range, but valuation is at the lo end of its range.
I think it has growth prospects in recycling, and energy from waste, which I expect to be growth industries. Landfills will become recycling factories, due to high commodity prices, rising demand, and falling supply. Every new mine, for every metal, has lower concentrations of product in the raw ore, and tend to be in politically unstable countries, or difficult locations. All the good mining sites have already been found and exploited. Rising energy costs also increase costs for all mining.
WM has also begun converting its fleet of trucks to run on natgas, and producing gas from their landfills. They produced more energy from their landfills in 2010, than all the solar energy produced in the U.S. |
