Waste Connections (WCN.TO)

Being acquired. Waste collection is a mature industry, so M&A is always a theme in that sector. If you are a shareholder, you might as well Hold because you are probably going to get some operating levers in terms of cutting costs, giving you a lift over that.

If you look at some of the peers within waste management, such as Republic Services (RSG-N) or Waste Management (WM-N), these are stocks that are behaving quite well, and behaving much better than the market. Generally, when you have a merger like this, there are opportunities for cost savings and synergies. This is a sector that he would consider and take a look at. If you own the stock, he would probably let this play out a little.

(A Top Pick Feb 4/15. Down 4.18%.) Recently put themselves up for sale. Sometimes when that happens, it is because they have heard that someone is interested in buying them, so put themselves up for auction to get a better price. Thinks it is probably worth $6-$7 more in a take out. They generate cash flow across North America in US$, and with lower fuel costs helping their margins it wouldn’t be a bad trade for a big conglomerate to scoop it in and get a cash flow.

Announced they hired investment bankers with the view of selling themselves. It is cheaper than its US peers. They are not trading at the multiple of the US companies. It is up 7-8% despite the market being down. It is hard to say what will happen. He feels the value is 15% higher than it is trading at right now. He likes the company even if it does not get taken over.

(A Top Pick Feb 4/15. Down 14.44%.) Thought this was going to do very well because of lower fuel costs. Also, picking up garbage is a recession proof industry. They had some flooding in one of their regions, so missed one of their quarters. The stock is slowly working its way back. Still thinks it is a pretty good company. 2.2% dividend yield.

It is on his radar screen. They reported weaker than expected numbers. He likes the industry long term. There are high barriers to entry. Multiples in the industry have gone up over the last few years. The recent pullback put it back on his watch list. It generates a reasonable amount of free cash flow.

He looked at it a few times, but he worried about margin pressure. After the drop it is certainly more appealing than it was before. He wants to see another quarter before making a decision. They had higher than expected operating costs last quarter and management needs to tackle this. Long term they are a good prospect.

They have a lot of US business. He has it in one of his model portfolios because he likes the 60% revenue that it produces. They have also been benefiting from lower fuel prices. There is certainly lots of competition and they have to win contracts from customers and cities to collect the garbage. Their market share is big enough and they have the scale to compete. Recently raised their dividend. Business is good. A nice solid company.

Continues to make acquisitions and has become the 3^rd largest waste management company in North America. He believes there is still room for growth. The waste management business is very fragmented in North America. The company generates a lot of free cash flow and have done a great job of improving operations. In a defensive market, this is the type of company you want to own.

Picks up garbage from industries, apartments and customers all across North America. There are 2 things he likes about this. Lower fuel costs as the cost of oil goes down, and US is about 60% of their revenue. Last quarter was pretty good, but more importantly they raised their dividend 6% last week. Dividend yield of 1.91%. A nice solid company that won’t disappoint you.

Besides death and taxes, there is sure to be garbage. It is an economically sensitive company because more economic activity generates more garbage. Lots of room for growth on the dividend and earnings. This company needs a catalyst for people to pay attention. He expects volumes and therefore earnings to go up.

They continue to merge and acquire new companies and make acquisitions in the US. Recently sold off an underperforming division. The focus for them is cost-cutting now. New trucks can be run by one operator and are natural gas operated and automated. As long as the US economy grows in the 2%-3% range, he thinks they will do fine.

(Top Pick May 21/14, Up 23.91%) Management has really cleaned up the ship. They have a 5 year plan to improve the operations. They are buying a bunch of trucks that are natural gas powered and use only one driver. He has been buying for new portfolios.

Just touched a multiyear high recently. Has been buying more of this today at around $34. They have added new trucks and are trying to increase the efficiency. He could see this as a Hold for many, many years.

He likes the waste management industry. A pretty steady business that should really grow at a GDP type level. The industry is still fairly fragmented and this company has been acquisitive. Stock has performed pretty well recently and he feels the industry is strong. A bit expensive.