In the video below, Fool analysts Blake Bos and Austin Smith discuss the biggest risks facing Waste Management (NYSE:WM) today. Investors may buy Waste Management for the stock's stability, but there are risks facing WM that could undermine that appeal.
The first is pressure on small governments, which rely on the federal government to be able to contract with companies like Waste Management for services. A cut to small government funding could hamper WM's ability to raise prices. Second, smaller competitors, especially in smaller markets, could step in an undercut WM's prices, forcing it either to lower prices or leave markets. Lastly, although investors are excited about Waste Management's entrance into the waste-to-energy area, the move also exposes the company to commodity price fluctuations. That could undermine some of the regularity investors have come to expect from WM in terms of margins and earnings.
Austin Smith owns shares of Waste Management. Blake Bos has no positions in the stocks mentioned above. The Motley Fool owns shares of Waste Management. Motley Fool newsletter services recommend The Home Depot, The Procter & Gamble Company, and Waste Management. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.