This article is part of our Rising Star Portfolio series.

In June, I found myself enamored of Waste Management's (NYSE: WM) potential to transform the lowly trash business into an environmentally positive haven and purchased shares for my Rising Star portfolio. In less than two months' time, Waste Management shares have gotten pretty trashed.

Trash … or is it treasure? The current situation looks like a far better buying opportunity to me. Furthermore, the recent overall bearishness certainly makes these scary times to invest, but Waste Management strikes me as a good defensive play. As ugly as the economic situation may get, people won't stop generating waste, and trash hauling and disposal is a pretty basic necessity.

The business
Houston-based Waste Management disposes of garbage in various ways, including recycling it into useful, valuable commodities. As of the end of last year, it owned and/or operated 271 landfill sites and 294 transfer stations that run the gamut of trash disposal and collection, transfer, and recycling.

It's also involved in some refreshingly green initiatives; through its subsidiary Wheelabrator Technologies, it operated 22 waste-to-energy plants as 2010 drew to a close.

At the end of July, Waste Management's second-quarter results disappointed analysts and investors. Net income fell to $237 million, or $0.50 per share; revenue, though, increased to $3.16 billion.

A poor economy yields lower volumes of trash; less consumption affects a company like Waste Management. However, trash isn't going away, so Waste Management certainly isn't a riskier company than many others right now.

Why I'm buying
I won't repeat the potentially environmentally transformative element of Waste Management's business that permeated my original purchase in June; you can read it for yourself. I'm buying more shares now because the recent pessimism yields a far cheaper price for this solid, dividend-paying company.

Since late June, Waste Management shares have fallen nearly 25%. That strikes me as just plain silly for such a stable company. Shares now trade at a mere 12 times forward earnings, and its PEG ratio is 1.36. Given the groundwork it's been laying for its business, I'd also venture to guess that analysts' five-year expectations for Waste Management may later prove to be far too low.

After all, some of the "disappointing" elements of Waste Management's recent quarterly results related to spending on growth-oriented initiatives. Waste Management is shelling out money that will better position it in the changing marketplace. In recent months, it's invested in interesting startups like Enerkem, Harvest Power, and Peninsula Compost. It just announced a $425 million acquisition of a rival trash hauler, Oakleaf Global Holdings, which will allow it to better work with third-party service providers.

Even better, Waste Management said it's also embarking on cost-reduction programs that it believes will generate at least $80 million in income from operations for the rest of 2011, which should help it weather the current economic uncertainty.

Such tidings don't strike me as particularly worthy of panic.

And now, the risks
Economic difficulties are translating into lower amounts of garbage; Waste Management disclosed that element of the economic realities of refuse. That's really the new significant takeaway that's more relevant now than in my original discussion of this company's risks.

Meanwhile, Waste Management still faces a large collection of rivals, such as Republic Services Group (NYSE: RSG), Veolia Environment (NYSE: VE), and Covanta Holding (NYSE: CVA). (Incidentally, my colleague Jordan DiPietro bought shares of Veolia Environment for his Rising Star portfolio in March.)

In tough times, competitive forces can and do get much worse for an entire industry. Still, I happen to believe Waste Management is a strong and formidable contender.

Foolish bottom line
Economic difficulties abound; many stocks have been bloodied in the recent market rout. Some stocks won't be worth their reduced prices, especially given plentiful economic challenges to their businesses. On the other hand, some stocks are becoming bargains.

I believe Waste Management belongs in the latter group. Let's block out some of the buzz related to the negativity surrounding its latest quarter and overall market pessimism. Investors currently have a great opportunity to take advantage of Waste Management's overly trashed stock price to generate even better long-term investment returns.     

This article is part of our Rising Star Portfolios series, where we give some of our most promising stock analysts cold, hard cash to manage on the Fool's behalf. We'd like you to track our performance and benefit from these real-money, real-time free stock picks. See all of our Rising Star analysts (and their portfolios).  

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.