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TheStreet Open House

5 Contrarian Blue-Chip Stocks That Could Pop in 2012

Stocks in this article: RYGRPNCPLWMBCH

Waste Management

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Turning garbage into gold -- that's essentially the idea behind buying aptly named Waste Management (WM). The $16 billion firm is the largest waste services firm in the country, with more than 270 landfills and a massive fleet of vehicles that spans the U.S. That hasn't spared WM from shorting -- as of this writing, the company's short interest ratio is 10.4.

That may seem surprising, after all, the trash business is generally thought of as a recession resistant way to generate cash, and Waste Management has historically been an innovative name. The firm's portfolio includes 22 waste-to-energy plants that are designed to turn the waste that WM literally gets paid to collect into renewable energy that the firm gets paid for again.

While innovations like that are still a small chunk of WM's total business, they're an important differentiator. So is scale -- Waste Management's sheer size provides it with the ability to court national accounts that smaller waste firms can't compete for.

So what's with the shorting? Again, it all comes back to dividend. WM's payout weighs in at 3.87%, a high yield that could send prices lower if it's cut. That said, WM has been enjoying perennially deep margins and higher revenues than ever.

That fundamental strength makes this stock a good candidate for a short squeeze in 2012.

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