As the economy goes through a downturn, wouldn’t you love to invest in a business that is not only recession-proof, but also has well-diversified sources of revenue? It is very satisfying when a revenue fall in one segment due to an economic downturn gets offset by a rise in another segment due to the same downturn. Waste Management Inc seems to be that kind of business.
COVID forces less office time and more home time
The governmental guidelines and lockdowns to control the spread of the pandemic have led to people working from home and spending more time with their families. Waste Management Inc earns revenues from collecting trash, transporting it, processing it, and recycling it. Collection services make up more than half of Waste Management Inc’s revenues. With very few or, in some cases, no employees visiting the office, trash collection from commercial locations obviously has fallen. However, more trash is now being generated in residential areas. So, revenues from the residential trash collection segment have gone up for the company.
The stock performance of waste management stocks 2020
The top 3 waste management stocks by market capitalization are Waste Management Inc, Republic Services Inc, and Waste Connections Inc. Waste Management’s stock is up 30% since March 23rd, almost flat for the year 2020, and up a marginal 0.14% for the past month. Republic Services Inc’s stock is up 42.79% since March 23rd, up 5.32% for the year 2020, and up 2.04% for the past month. Waste Connections Inc’s stock is up 44.85% since March 23rd, up 14.72% for the year 2020, and up 5.33% for the past month.
What about sustainability?
The rise of ESG has meant greater investor interest in environmental service stocks. Waste Management Inc has made some serious efforts on the environment front. It uses renewable energy in specific areas of its operations, helps collect trash and hazardous waste, and recycles that waste or disposes it in compliance with environmental regulations. If you are looking to buy recycling stock, then Waste Management fits the bill because it recycles paper, glass, plastic, metals, and commodities that it finds in the collected waste. The recycled material then gets reused by packaging companies and manufacturers.