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'Waste-full' Is Good for the Long Haul

To top things off WCN provides container and chassis sales and leasing services to its customers. As of March 31, the company owned or operated a network of 148 solid waste collection operations, 59 transfer stations, 39 recycling operations, 46 landfills, 7 intermodal facilities and 1 exploration and production waste treatment and disposal facility. It also served approximately two million residential, commercial and industrial customers from a network of operations in 30 states in the U.S.

Its dividend is only 1.24% but that represents a payout of just 27% of WCN's earnings. That means there's plenty of money with which to increase their dividend. Their operating cash flow (over the trailing 12 months) is over $417 million and their levered free cash flow tops $230 million.

As the chart below illustrates WCN has had a nice one-year run in both their share price and their earnings per share.

WCN ChartWCN data by YCharts

Interested investors may be well advised to wait for price pullbacks below $31 to initiate or add to positions of WCN. Its five-year PEG ratio is also over 2 so in my opinion either the price needs to come down or earnings need to accelerate meaningfully over this quarter and into 2013.

One thing we can count on is that the need for waste disposal and recycling isn't going to subside anytime soon. As communities rebuild in the aftermath of widespread calamities like superstorm Sandy, the need to haul away mountains of debris, clean up the messes, reclaim and recycle will be greater than ever.

Hopefully these companies will be direct beneficiaries and the extra income will fall directly to their bottom line. For now, watch them carefully and consider buying when and if their shares go on sale.

At the time of publication the author held no positions in any of the companies mentioned in this article.

Jim Cramer and Stephanie Link actively manage a real money portfolio for his charitable trust- enjoy advance notice of every trade, full access to the portfolio, and deep coverage of the latest economic events and market movements.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Stock quotes in this article: WM, RSG, WCN 

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