"We still see a rocky road ahead this year; however, November appears to have put an important stock market bottom in place," says Jim Stack, who accurately foresaw the derivatives and housing crisis, and the market decline.
In his InvesTech Market Analyst he adds, "We are selectively taking advantage of deep values such as Waste Management (NTSE: WMI), which is selling at a compelling valuation."
"Waste Management displays the characteristics we search for in new investments including a distinct competitive advantage and solid financials. It is a giant in its industry; Waste Management is the largest solid waste management company in North America.
"Founded in 1894, it serves nearly 20 million customers in the commercial, industrial, municipal and residential markets.
"Its services include waste collection, transfer, disposal, recycling and resource recovery. Waste Management handles 130+ million tons of disposal each year, representing a 40-45% share of the waste disposal market.
"WMI operates through a network of nearly 300 landfills in North America. Dominant landfill ownership provides this company a wide moat and discourages competition as landfills are difficult to develop due to the need for zoning approvals and permits.
"With the nation’s largest network of landfills, Waste Management has significant pricing power and can charge fees to competitive waste haulers who don’t own, or have access to, their own landfills.
"The company is vertically integrated and includes divisions for recycling and waste-to-energy, allowing customers to not only manage, but minimize, their waste.
"It also owns or operates 16 waste-to-energy facilities and five independent power production plants where solid waste is converted to steam and sold to commercial and industrial users and electric utilities. These portions of the business could show strong growth as 'green' initiatives continue to gain momentum.
"Waste Management is the industry leader and its size, market share, and vertical integration provide distinct competitive advantages.
"Waste Management boasts a strong balance sheet with free cash flow of $260 million.
