Waste Connections is Wednesday's pick for IBD 50 Growth Stocks To Watch as the waste collection service provider currently sits in a buy zone.
Waste Connections stock was retreating modestly Wednesday after reaching an all-time high in heavier-than-average volume Tuesday. The company's earnings and chart both show traits of stability, making it an institutional favorite.
Waste Connections serves residential, commercial and municipality customers in nonhazardous solid waste collection, recycling pickup and dumpster rental. It also handles chemical and biological waste and electronics recycling in 46 U.S. states and parts of Canada.
The IBD 50 name ranks No. 2 out of 34 stocks in the Pollution Control group. The group moved up to No. 47 from the 105th spot four weeks ago out of the 197 industry groups Investor's Business Daily tracks. Investors have rotated to more defensive names as of late and pollution and waste control stocks fit that category.
A company representative is set to present at the Gabelli Funds annual Waste & Sustainability Symposium held Thursday in New York City.
How To Know It's Time To Sell Your Favorite Stock
Trash Collection Stock Near A High
Waste Connections stock is in what usually would be a buy zone up to 201.15 of an early-stage cup-with-handle base with a 191.57 buy point. It also formed a four-weeks tight pattern within the handle, according to MarketSurge pattern recognition.
Investors should be cautious of breakouts and new buys during the current market correction and should follow risk management rules, including cutting losses at 7%. Be sure to read the daily IBD Big Picture column for current market analysis.
To avoid big swings in stock price, IBD looks for names with a 21-day Average True Range of 5% or less and Waste Connections stock sits at 1.6%.
The stock is back above its 10-week moving average after two tests of the line in March. Its relative strength line has climbed swiftly from December lows.
Its IBD Accumulation/Distribution Rating of A- indicates fairly heavy institutional buying over the last 13 weeks. Mutual funds own 55% of shares and fund ownership has increased for eight straight quarters.
And its 1.4 up/down volume ratio shows positive demand for the stock over the last 50 days.
Waste Connections Shows Steady Profit Growth
The trash collections provider missed fourth-quarter profit estimates but topped sales on Feb. 12. Its 2024 revenue was reported at $8.920 billion and it guided 2025 sales in the $9.45 billion to $9.6 billion range, in the earnings release.
Its first-quarter earnings are expected to rise 4% and accelerate to 16% growth over the next four quarters. Meanwhile, sales are projected to climb an average 7% over the next four quarters — down from an average 12% over the prior three quarters.
Full-year profits are forecast to rise 10% in 2025 and 14% in 2026. The company has been a steady profit grower as seen in its Earnings Stability factor of 4 out of a possible 99 — with a lower number being better. Also, the waste removal stock holds a 96 IBD Composite Rating.
Waste Connections is set to report first-quarter results April 23.
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