Garbage Collection Lacks Mob Profits

BOSTON (TheStreet) -- When some people hear the profession "waste management," they think of Tony Soprano.

The fictional mob boss of HBO's "The Sopranos" portrayed himself as a waste-management consultant in polite society. In reality, the industry is more progressive and "green" than the gritty images of northern New Jersey from the series would suggest.

Major players include Republic Services(RSG Quote) and Stericycle(SRCL Quote), but the biggest name is the one you probably see stamped on garbage trucks. Houston-based Waste Management(WM Quote) has more than $10 billion in annual revenue, generated from collection and landfill services to recycling and waste-to-energy-electricity generation.

Waste-management companies are on the front lines of greening up the country. The dumping and recycling of garbage is crucial to environmental efforts. Those pushing for change have their eyes on Waste Management, Republic Services and Stericycle.

Stericycle deals mainly with medical waste, which potentially can pollute more than household garbage. While the handling of such dangerous material is profitable, the downside of Stericycle's responsibility is above-average risk. A slip in best practices could lead to a costly cleanup or a lawsuit in the worst cases. Although such circumstances are an exception rather than the rule, it's a consideration that can erode profitability in the long run.

Waste Management touts its commitment to recycling and waste-to-energy production, even as those segments contribute only 5.7% and 6% of revenue, respectively. The main driver of revenue is collection -- the hauling away of garbage in its green-colored trucks. That should be investors' main concern. Total collection weight is the gold ring, so getting sidetracked by recycling or other services is akin to being blinded by fancy footwork.