Waste Management (WM -0.13%) is the big dog among industrial companies that specialize in garbage, when you look at market cap or annual revenue. It has certainly lived up to the hype, as much as any trash company can be hyped -- by delivering a total return of nearly 290% over the past decade.
However, there's a much smaller, more specialized waste management company that's a better bet for investors right now. Clean Harbors (CLH -0.26%), based in Norwell, Massachusetts, focuses on end-to-end hazardous waste management, emergency spill response, industrial cleaning and maintenance, and recycling services.
Here are three reasons Clean Harbors is a better stock than Waste Management right now.
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Clean Harbors has a wider moat
Waste Management primarily collects municipal solid waste and residential trash, a defensive, highly steady market, but one constrained by municipal caps and lower pricing power.
NYSE: CLH
Key Data Points
Clean Harbors operates in a completely different regulatory tier, holding a dominant position in North American hazardous waste disposal, industrial treatment, and chemical incineration.
The company operates eight commercial hazardous-waste incinerators and multiple secure landfills for the disposal of materials covered by the Resource Conservation and Recovery Act, the Toxic Substances Control Act, and the Naturally Occurring Radioactive Materials Act.
None of these secure landfills can be replicated by a new entrant under the current U.S. permitting policy.
Clean Harbors' existing infrastructure represents an almost irreplaceable asset footprint, giving it substantial pricing power that municipal waste operators cannot replicate.
Clean Harbors has stronger top-line revenue momentum
Clean Harbors has demonstrated faster top-line sales velocity and faster earnings-per-share (EPS) growth than Waste Management, not just this year, but over the past five years. It is a smaller company with more room to grow.
In the second quarter, it reported $1.74 billion in revenue, up 12% year over year, with earnings per share (EPS) of $3.22, up 35.8% over the same period last year. It also increased 2026 guidance for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), and adjusted free cash flow.
Waste Management's second-quarter revenue rose just 4% year over year to $6.68 billion, while its EPS fell 3% from the same period a year ago to $1.95. Instead of raising full-year guidance, the company trimmed it slightly for revenue and adjusted operating EBITDA.
Regulations are widening Clean Harbors' moat
Environmental regulations are tightening rapidly, particularly around the remediation of per- and polyfluoroalkyl substances (PFAS), more commonly known as "forever chemicals."
The Environmental Protection Agency (EPA) rules mandating the safe disposal and destruction of toxic materials direct high-margin demand directly to Clean Harbors' specialized network.
While Waste Management primarily handles volume-based municipal solid waste, Clean Harbors benefits from high-value compliance mandates that industrial clients cannot defer.
Waste Management has one advantage
Clean Harbors, though not as well known, has not gone unnoticed. Its shares are up more than 33% this year, while Waste Management's are down more than 5%.
Waste Management may be a better choice, though, for some income-oriented investors. It offers a dividend, which Clean Harbors does not, and the yield is above average at 1.77%.
However, for investors seeking alpha, earnings expansion, and tailwind exposure to federal environmental mandates, Clean Harbors presents the overall stronger buy opportunity right now.
