Will Waste Management Clean up in 2013?

As 2013 begins, now's a good time to look at the future prospects for the stocks you own. If you don't know where a company's headed in the next year and beyond, then it's impossible to make an informed decision about whether you should add the stock to your portfolio -- or sell it if you already own it.

Today, I'll look at Waste Management (NYSE: WM  ) . The trash and recycling specialist managed to post decent gains in 2012, but stronger competition is starting to take its toll on the company's dynasty. Below, you'll learn more about Waste Management's prospects for 2013.

Stats on Waste Management

Average Stock Target Price

$34.50

Full-Year 2012 EPS Estimate

$2.10

Full-Year 2013 EPS Estimate

$2.28

Full-Year 2012 Sales Growth Estimate

1.6%

Full-Year 2013 Sales Growth Estimate

2.2%

Forward P/E

14.8

Source: Yahoo Finance.

Will Waste Management be trash or treasure in 2013?
Waste Management hasn't grown quickly for some time, and analysts don't think 2013 will be much different. With earnings and revenue gains muted at best, the average target price analysts have put on the stock is just 2% higher than its current share price.

The thing that keeps investors coming back to Waste Management is its dividend. With healthy cash flow, the company has been able to keep boosting its payouts to shareholders while still retaining enough capital to invest in new projects.

Moreover, one big advantage that Waste Management has over smaller players Republic Services (NYSE: RSG  ) and Waste Connections (NYSE: WCN  ) is its extensive network of landfills. With more available capacity, Waste Management is able to dictate prices, and its recent acquisition of Oakleaf allows it to provide trash outsourcing services to other trash companies, essentially collecting trash from trash haulers and reaping the benefits of landfill fees as well as potential energy products.

Still, perhaps Waste Management's biggest potential comes from landfill energy. With Veolia Environnement (NYSE: VE  ) having largely abandoned the U.S. market, Waste Management remains with big potential to profit from biogas produced from landfills. Thanks to Capstone Turbine (NASDAQ: CPST  ) and its multi-fuel generators, Waste Management may have a growing revenue source from gas.

Waste Management doesn't blow investors away with growth, but its solid performance is a useful trait in uncertain times. If the company can make use of its leadership position, beating sales and earnings estimates could be the first step toward a blockbuster year for the stock.

Learn more
Get the full scoop on Waste Management and its future prospects by taking a look at our premium research report on the trash company. Our top analysts share their views on whether to buy Waste Management right now along with an in-depth discussion of all of the company's challenges and opportunities. Don't wait another minute; click here now for access.

Click here to add Waste Management to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


Read/Post Comments (2) | Recommend This Article (1)

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  • Report this Comment On January 04, 2013, at 7:22 PM, RedScourge wrote:

    If your goal is to outperform the market, this stock isn't going to do it with dividends alone. You're way better off taking a low fee index ETF like VTI.

  • Report this Comment On January 12, 2013, at 11:57 AM, NickD wrote:

    Buy on dips and hold forever recipe for susses.

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