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Why is Waste Connections so Expensive?

Garbage collection isn’t exactly a defensive bet.

Andrew Willis 1 April, 2022 | 4:28AM
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Andrew Willis: Waste Connections (WCN) is classified as an industrial stock, but a lot of investors associate it with garbage collection day, and a defensive. A regular experience that surely translates into recurring revenue, right?

Not exactly. As Sector Director Brian Bernard explains, the waste industry is still modestly cyclical – and the recycling business is volatile. The garbage truck might be coming by as often in the future, but picking up less garbage if we buy less.

Waste Connections is an industry leader, with a wide moat, strong pricing. But investors might be paying too much for top-line expansion we forecast at around 8% annually until 2026 – unless, of course, our consumer culture continues…

For Morningstar, I’m Andrew Willis.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Waste Connections Inc187.44 CAD-0.12Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar.ca. Follow him on Twitter @AndrewWillisCDN.

 

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