Tuesday, February 18, 2014

That's a bunch of....Waste.....Management, that is (& US Ecology)

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Waste Management (WM) reported earnings today and disappointed vs Street estimates.  Market took stock down close to 5%.  (see first chart below)

The company also announced a 2.7% hike in the dividend (which is approx. 3.3%) and a share buyback of $600mm. 

I still like the theme of waste removal, the high barriers to entry in this space, and the seeming uptick in the US economy which should help WM’s business on both corporate and retail level.  The latter, too, should be helped by privatization of services by struggling municipalities.

Technical players are likely to look at today’s price action as bringing WM close to key support levels and close to technically ‘oversold’ conditions.  Will be watching those levels closely as first key tests of support for a bounce.

Brought total position up to 3% from 2.4%.  If it dips further I’d likely add.

Another company in this space that I’m eyeing is US Ecology (ECOL) (no current positions).  They reported earnings last week, and on that day, the stock took its own ‘flash crash’ before rebounding strongly!  (see second chart below).  The market was initially concerned about a decrease in revenues from Gov’t contracts, which on the earnings call, the company explained as being largely due to the 2013 sequestration and budget cuts.  The business, however, is quite diversified, and the company sounded quite positive on upcoming projects for 2014 in other customer segments. 

ECOL is a relatively smaller company and trades in much less average daily volume.  But on a pullback from current levels, this is on my shopping list.

Will keep you posted.



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(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
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Additional Disclaimer: currently long many stocks/ETFs incl WM.  Positions may change at any time without notice.   

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