Friday, July 29, 2011

Trash is treasure ($WM)

Recently, I have been very weary of my longs in Frontier Communications ($FTR). I have watched my holdings in this richly paying dividend telecom chip away since their very bleak earnings report in February. When it came out, I tried to remain confident and wait for the rebound, but I knew it just wasn't there; expenses were going up and revenues were going down.

 As we continue to be uncertain about what is bound to happen with our economy, (GDP revision was ugly this morning) one sector that looked attractive to me was Waste Management ($WM). "The Company is a provider of waste management services in North America. Its subsidiaries provide collection, transfer, recycling and disposal services. The Company is also a developer, operator and owner of waste-to-energy and landfill gas-to-energy facilities in the United States". Basically, even if we have to go through rough times, people will still be creating trash that will need to be picked up, and recyclables that will need to be refined. Operating revenues from Recycling, Collection, Landfill were all up from Q1. Dividend yield is 4.25%, above the S&P average and greater than that of US Treasurers. P/E ratio of 16 tells me the company is still a value play. WM continues to sell off from its big down day yesterday, I will continue today to look through its report, set aside all of the “transitory” (lol) bad news and focus on growth strategies. Have a good weekend everyone. 

Above: chart of WM, w/ upper, lower b bands and SMA, notice drop off yesterday and continued weakness today

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