Core Viewpoint - Warren Buffett emphasizes the importance of long-term investment rather than market timing, suggesting that investors should accumulate time in the market to benefit from economic growth in the U.S. [1] Group 1: Investment Strategy - Buffett's cash holdings as a percentage of total assets in Berkshire Hathaway can indicate his market sentiment, with high cash levels suggesting he is waiting for better investment opportunities [2][3] - Current cash levels in Berkshire Hathaway have not been seen since previous economic downturns, indicating a potential strategy of waiting for lower stock prices [3] Group 2: Company Analysis - High-quality, resilient companies such as PepsiCo, Waste Management, and Costco are highlighted as attractive investment options in a potentially overvalued market [4] - PepsiCo's current P/E ratio of 18.1x is below its historical average of 23.0x, suggesting it may be undervalued and suitable for a dollar-cost averaging strategy [5][6] - Waste Management is recognized for its stable business model and consistent long-term returns, with a current P/E ratio of 33.89 and a price target of $254.35, indicating a potential 23% upside from its current price [9][11] - Costco is noted for its resilience and ability to deliver value, despite having a high P/E ratio of 55.64, which reflects its premium status in the retail sector [13][14]

Core Viewpoint - The article highlights four growth stocks that have shown significant historical performance and potential for future growth, suggesting they may be suitable for long-term investment portfolios. Group 1: Nvidia - Nvidia has achieved an average annual growth rate of 56.1% over the past 15 years, turning $1,000 into over $790,000 [2] - The company has averaged annual gains of 116.5% over the past three years [2] - Nvidia's data center business has surged from $3 billion to $115 billion in annual revenue in five years, indicating strong growth potential [3] Group 2: Alphabet - Alphabet, the parent company of Google, is a leader in AI and cloud computing, with a diverse range of products including Google Search and YouTube [4][5] - The company initiated a dividend payout in 2024, recently increasing it by 5% [5] - Alphabet's forward P/E ratio is 20, below its five-year average of 22, suggesting an attractive valuation [6] Group 3: Waste Management - Waste Management has averaged annual gains of 14.4% over the past 15 years, with over 17% gains in the last five and ten years [7] - The company is considered recession-resistant, as demand for waste collection remains stable during economic downturns [8] - The stock has a forward P/E of 30, slightly above its five-year average of 27, and offers a growing dividend yield of 1.4% [9][10] Group 4: Vanguard Information Technology ETF - The Vanguard Information Technology ETF has averaged annual gains of 18.4% over the past five years, with 21.5% and 19.6% over the past decade and 15 years, respectively [12][13] - The ETF includes over 300 tech stocks, with top holdings in major companies like Nvidia and Microsoft [12]

Core Viewpoint - Long-term dividend stocks are generally more stable and provide consistent dividends due to their established nature and lower volatility compared to the broader market [1][2] Group 1: Waste Management - Waste Management Inc. is a significant player in the waste and recyclables collection industry, with a market capitalization exceeding $92 billion [4] - The company has a dividend yield of 1.40%, an annual dividend of $3.30, and a 22-year track record of increasing dividends, with a payout ratio of 48.96% [5] - In the second quarter of 2025, Waste Management reported a 19% year-over-year increase in revenue, alongside strong earnings per share (EPS) [6] - Operating expenses have decreased to less than 60% of revenue, contributing to a solid free cash flow projection of nearly $3 billion for the year [7] Group 2: Eversource Energy - Eversource Energy, a major utility provider in the northeast, has a dividend yield of 4.63% and an annual dividend of $3.01, but a high payout ratio of 129.18% [9] - The company managed to slightly increase its EPS to 96 cents, surpassing analyst expectations, and reaffirmed its full-year EPS guidance [10] - Eversource's revenue grew by 12% year-over-year, although it fell short of predictions, with a permanent rate increase in New Hampshire expected to provide stability [11] Group 3: Johnson & Johnson - Johnson & Johnson boasts a dividend yield of 3.00%, an annual dividend of $5.20, and an impressive 64-year history of dividend increases, with a payout ratio of 55.61% [12][13] - The company exceeded EPS predictions by 9 cents and revenue estimates by nearly $900 million in its mid-July earnings report [13] - Growth is driven by its innovative medicine business, particularly in oncology, with potential peak sales of $5 billion for its drug candidate TAR200 [14]

Group 1: Market Overview - The S&P 500 is expected to have an above-average year in 2025 following a rapid recovery from a steep sell-off in April, with gains of over 20% in both 2023 and 2024 [1][2] Group 2: WM (Waste Management) - WM has outperformed the S&P 500 over the last five and ten years, despite the S&P's gains being driven by megacap tech stocks [4][6] - The company has a stable business model focused on waste management, which is essential as population and economic growth increase the demand for waste collection and processing [5][6] - WM reported a 29.9% total company margin under adjusted EBITDA, with a 7.1% growth in its legacy business and 19% overall revenue growth due to the acquisition of Stericycle [7][9] - The Stericycle acquisition, valued at $7.2 billion, enhances WM's position in the healthcare waste market, while a previous acquisition of Advanced Disposal for $4.6 billion expanded its geographic coverage [8][9] - WM has a premium valuation at 29.9 times forward earnings, supported by stable free cash flow used for dividends, stock repurchases, and reinvestment [9][10] - The company has raised its dividend for 22 consecutive years, with a recent 10% increase, resulting in a yield of 1.5% [10][11] Group 3: IBM (International Business Machines) - IBM, despite being over a century old, is characterized as a growth stock due to its strong exposure to AI, with a generative-AI book of business valued at $7.5 billion since 2023 [12][14] - The stock offers an attractive forward dividend yield of 2.6%, making it a solid option for passive income while benefiting from AI market growth [13][18] - IBM's five-year average payout ratio of 156% raises concerns, but its strong free cash flow covers the dividend, alleviating investor worries [16] Group 4: Delta Air Lines - Delta Air Lines offers a dividend with a current yield of 1.4% and is positioned as a growth stock, contrary to traditional views of airlines as cyclical businesses [19][20] - The company's focus on sustainable premium cabin revenue and loyalty programs reduces earnings cyclicality, contributing to long-term growth potential [20][21] - Delta is well-positioned to manage rising airport costs, as these costs represent a smaller portion of its business compared to low-cost carriers, and the airline industry is exhibiting more disciplined behavior [22]

Core Insights - Waste Management (WM) reported a 19% non-GAAP operating EBITDA growth in Q2 2025, contributing over half of the year-over-year increase in operating EBITDA [3][14] - The company achieved a total operating EBITDA margin of nearly 30% for Q2 2025, approaching historical best levels despite a negative impact from the expiration of the alternative fuel tax credit [3][27] - Management confirmed an upward revision of non-GAAP free cash flow guidance for 2025 to between $2.8 billion and $2.9 billion, with a total of $1.29 billion in free cash flow delivered in the first half of 2025 [4][31] Financial Performance - Collection and disposal operating EBITDA margin improved by 60 basis points to 37.9% in Q2 2025, supported by strong landfill volumes and targeted asset investments [3][21] - The legacy business achieved a 130 basis point improvement in operating EBITDA margin, reaching 31.3% in Q2 2025 [7][27] - Free cash flow for the first half of 2025 was $1.29 billion, with capital expenditures totaling $1.56 billion [7][30] Operational Efficiency - The operating expense ratio set a record in Q2 2025, remaining below 60% of revenue due to technological integration and process discipline [3][22] - Turnover for drivers and technicians improved by 370 basis points to 18.8% in Q2 2025, indicating progress in workforce stability [3][24] - The company completed a regional solid waste acquisition in the Washington, D.C. area, with full-year acquisition spending expected to exceed $500 million [7][15] Sustainability and Growth - Recycling operating EBITDA grew by 17% in Q2 2025, despite a nearly 15% decline in recycled commodity prices [7][16] - 90% of 2025 renewable gas off-take is locked, with an average RIN price of $2.55 in Q2 2025, exceeding market expectations [7][62] - The integration of WM Healthcare Solutions is on track to achieve the upper end of the $80-$100 million synergy target for 2025, with a 190 basis point improvement in operating EBITDA margin since acquisition [7][18] Market Trends - Collection and disposal volume grew by 1.6% in Q2 2025, influenced by wildfire cleanup efforts, while the loss of a large franchise contract negatively impacted residential and commercial volumes [3][21] - The company maintains annual volume guidance, projecting full-year volume growth between 0.25% and 0.75% [3][32] - The strength of the sustainability platform continues to distinguish WM in the industry, aligning with key secular drivers of circularity and energy demand [7][16]

Core Insights - Waste Management, Inc. is highlighted as a strong compounder, often overlooked due to its unexciting business model [1] Company Analysis - Waste Management, Inc. operates in the waste management sector, which is essential yet often considered mundane [1] - The company exemplifies how solid performance can come from industries that may not be perceived as innovative [1] Investment Perspective - The article suggests that investors should consider companies like Waste Management, Inc. for their potential long-term growth, despite their less glamorous nature [1]

Core Viewpoint - The article discusses the importance of understanding the implications of recent financial performance and market trends for investment decisions [1][2]. Financial Performance - Recent earnings reports indicate a significant increase in revenue for the company, with a year-over-year growth of 15% [1]. - The net profit margin has improved from 10% to 12%, reflecting better cost management and operational efficiency [1]. Market Trends - The industry is experiencing a shift towards digital transformation, with companies investing heavily in technology to enhance customer experience [2]. - Analysts predict that the market will grow at a compound annual growth rate (CAGR) of 8% over the next five years, driven by increased demand for innovative solutions [2]. Investment Opportunities - There are emerging opportunities in sectors such as renewable energy and technology, which are expected to outperform traditional industries [1]. - Companies that adapt to changing consumer preferences and invest in sustainable practices are likely to see enhanced market positions [2].

Core Insights - Waste Management Inc reported better-than-expected earnings for Q2, with earnings of $1.92 per share, surpassing the analyst consensus estimate of $1.89 per share, and quarterly sales of $6.430 billion, exceeding the estimate of $6.369 billion [1][2] Financial Performance - The company achieved robust organic revenue growth and margin expansion in its Collection and Disposal business, reaching the best-ever operating expense margin [2] - Operating EBITDA grew by double digits in both Recycling Processing and Sales and WM Renewable Energy segments, indicating strong earnings contributions from sustainability investments [2] Guidance and Analyst Ratings - Waste Management lowered its FY2025 sales guidance from a range of $25.550 billion-$25.800 billion to $25.275 billion-$25.475 billion [2] - Following the earnings announcement, analysts adjusted their price targets: Oppenheimer raised it from $260 to $265, UBS from $260 to $265, and BMO Capital from $245 to $248, while maintaining their respective ratings [3][5]

Financial Performance - Waste Management delivered a healthy top and bottom line beat, driven by strength in the core business [2] - Healthcare solutions EBITDA margins improved by 170 basis points [6] - The core business continues to drive gross margins [6] - The company raised its margin expectations due to strong performance in pricing and cost control [7] Business Strategy & Operations - Waste Management's stock is considered a "forever stock" due to consistent performance [3] - Acquisitions, such as Stir Cycle, have been a key factor in the company's success [4] - The company has smoothed out fluctuations in the recycling business through contract adjustments and diversification into areas like healthcare solutions [10] - Increasing regulatory requirements can work in Waste Management's favor due to its self-regulation practices [18] Market & Economic Outlook - The garbage business can provide insights into the economy [2] - The construction and demolition business is improving sequentially, indicating potential economic improvement [14] - The company sees signs of economic strengthening, particularly in the commercial and industrial sectors [13] - Waste Management is well-positioned regarding declining landfill airspace availability, with advantageous locations in major MSAs [21]

[PART I. Financial Information](index=2&type=section&id=PART%20I.%20Financial%20Information) [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements.) Waste Management, Inc.'s unaudited Condensed Consolidated Financial Statements for Q2 2025 detail balance sheets, income statements, cash flows, and notes on acquisitions, debt, and segment performance [Condensed Consolidated Financial Statements](index=2&type=section&id=Condensed%20Consolidated%20Financial%20Statements) The company's financial statements show asset growth, increased revenues, a slight net income decrease, and higher operating cash flow for the first half of 2025 Condensed Consolidated Balance Sheet Highlights (in Millions) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $4,984 | $4,774 | | **Total Assets** | $45,722 | $44,567 | | **Total Current Liabilities** | $5,816 | $6,258 | | **Total Liabilities** | $36,520 | $36,313 | | **Total Equity** | $9,202 | $8,254 | Condensed Consolidated Statement of Operations Highlights (in Millions, except per share) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Operating Revenues** | $6,430 | $5,402 | $12,448 | $10,561 | | **Income from Operations** | $1,151 | $1,009 | $2,164 | $2,025 | | **Net Income Attributable to WM** | $726 | $680 | $1,363 | $1,388 | | **Diluted EPS** | $1.80 | $1.69 | $3.37 | $3.44 | Condensed Consolidated Statement of Cash Flows Highlights (in Millions) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | $2,753 | $2,521 | | **Net Cash Used in Investing Activities** | $(1,915) | $(2,359) | | **Net Cash Used in Financing Activities** | $(781) | $(464) | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail financial statement basis, Stericycle integration, revenue recognition, debt structure, income taxes, segment performance, and significant commitments and contingencies - The company completed the acquisition of Stericycle, Inc. on November 4, 2024, which is now presented as the new WM Healthcare Solutions reportable segment[20](index=20&type=chunk) - Total debt outstanding was **$24.0 billion** as of June 30, 2025, up slightly from **$23.9 billion** at year-end 2024. The company has classified **$3.0 billion** of debt maturing in the next 12 months as long-term due to its intent and ability to refinance[31](index=31&type=chunk)[32](index=32&type=chunk) - The effective income tax rate for the six months ended June 30, 2025 was **20.5%**, down from **21.3%** in the prior year period, primarily due to federal tax credits from RNG and low-income housing investments[41](index=41&type=chunk)[43](index=43&type=chunk)[46](index=46&type=chunk) - The company has temporarily suspended its common stock repurchase program following the Stericycle acquisition to focus on returning leverage to targeted levels[98](index=98&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses Q2 2025 financial performance, highlighting revenue growth driven by acquisitions and yield, operating income changes, liquidity, and capital allocation priorities [Overview, Strategy, and Business Environment](index=32&type=section&id=Overview,%20Strategy,%20and%20Business%20Environment) The company, a leading environmental solutions provider, details its core strategy of differentiation, continuous improvement, and sustainability investments, including the integration of Stericycle - The acquisition of Stericycle on November 4, 2024, added a new reportable segment, WM Healthcare Solutions, expanding services into regulated waste, compliance, and secure information destruction[111](index=111&type=chunk) - The core strategy is focused differentiation and continuous improvement, leveraging its asset network and investing in automation and technology to enhance customer experience and efficiency[112](index=112&type=chunk) - Sustainability growth strategy includes significant investments in the WM Renewable Energy and Recycling Processing and Sales segments to meet evolving customer and regulatory demands for diversion and waste reduction[112](index=112&type=chunk)[113](index=113&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) Q2 2025 revenues increased significantly due to acquisitions and internal growth, while operating expenses improved as a percentage of revenue, and net interest expense rose due to acquisition debt Revenue Change Analysis (Q2 2025 vs. Q2 2024) | Component | Amount (Millions) | As a % of Total Company Change | | :--- | :--- | :--- | | Average Yield | $175 | 3.3% | | Volume | $115 | 2.1% | | **Internal Revenue Growth** | **$290** | **5.4%** | | Acquisitions | $746 | 13.7% | | Divestitures & Other | $(8) | (0.1)% | | **Total Revenue Change** | **$1,028** | **19.0%** | Operating Highlights (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Operating Expenses as % of Revenue | 59.7% | 60.9% | | SG&A as % of Revenue | 10.8% | 9.3% | | Income from Operations (Millions) | $1,151 | $1,009 | | Operating Margin | 17.9% | 18.7% | - The increase in SG&A expenses was primarily due to higher labor costs from acquisitions and consulting fees incurred to support the integration of Stericycle[143](index=143&type=chunk) - Net interest expense rose to **$232 million** in Q2 2025 from **$136 million** in Q2 2024, mainly due to increased debt from the Stericycle acquisition[153](index=153&type=chunk) [Segment Performance](index=48&type=section&id=Segment%20Performance) Q2 2025 segment performance shows growth in Collection and Disposal and Renewable Energy, a decline in Recycling, and an operating loss for the new WM Healthcare Solutions segment Income from Operations by Segment (Q2 2025 vs Q2 2024, in Millions) | Segment | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Collection and Disposal | $1,461 | $1,359 | 7.5% | | Recycling Processing and Sales | $24 | $29 | (17.2)% | | WM Renewable Energy | $38 | $18 | 111.1% | | WM Healthcare Solutions | $(23) | — | N/A | | Corporate and Other | $(349) | $(397) | (12.1)% | | **Total** | **$1,151** | **$1,009** | **14.1%** | - The West Tier of the Collection and Disposal segment showed strong performance with a **12.3%** increase in operating income, benefiting from wildfire clean-up activities[151](index=151&type=chunk)[152](index=152&type=chunk) - The WM Healthcare Solutions segment's operating loss was primarily due to depreciation, amortization, and integration-related expenses following the Stericycle acquisition[152](index=152&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with increased operating cash flow, manages debt post-acquisition, and has temporarily suspended share repurchases to prioritize deleveraging Cash Flow and Liquidity Summary (Six Months Ended June 30, in Millions) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $2,753 | $2,521 | | Capital Expenditures | $(1,563) | $(1,335) | | Proceeds from Divestitures | $103 | $58 | | **Free Cash Flow (Non-GAAP)** | **$1,293** | **$1,244** | - Total debt was **$24.0 billion** as of June 30, 2025. The company has **$1.8 billion** of available capacity under its **$3.5 billion** revolving credit facility[158](index=158&type=chunk)[33](index=33&type=chunk) - The share repurchase program was temporarily suspended after the Stericycle acquisition. The company expects to resume repurchases once leverage returns to targeted levels, projected for **Q2 2026**[166](index=166&type=chunk) - Cash dividends paid increased to **$669 million** in the first half of 2025 from **$608 million** in the prior year, due to a quarterly dividend increase from **$0.75** to **$0.825** per share[166](index=166&type=chunk) [Item 4. Controls and Procedures](index=55&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The principal executive and financial officers concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[174](index=174&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[175](index=175&type=chunk) [PART II. Other Information](index=56&type=section&id=PART%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings.) Information on legal proceedings, including environmental matters and Stericycle-related litigation, is detailed in Note 6 to the financial statements - Information on legal proceedings is detailed in Note 6 to the financial statements[177](index=177&type=chunk) - Key legal matters include environmental proceedings, such as involvement in **74 Superfund sites**, and litigation assumed from the Stericycle acquisition, including a now-terminated DPA with the DOJ and an ongoing DEA investigation into a divested business[59](index=59&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) [Item 1A. Risk Factors](index=56&type=section&id=Item%201A.%20Risk%20Factors.) No material changes to risk factors previously disclosed in the 2024 Annual Report on Form 10-K have occurred - There have been no material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K[178](index=178&type=chunk) [Item 5. Other Information](index=56&type=section&id=Item%205.%20Other%20Information.) This section discloses the adoption of net share settlement plans by two executive officers in May 2025 for the automatic exercise of stock options - On May 20, 2025, Tara J. Hemmer, SVP and Chief Sustainability Officer, adopted a net share settlement plan to exercise up to **53,429** stock options[182](index=182&type=chunk) - On May 30, 2025, Charles Boettcher, EVP and Chief Legal Officer, adopted a net share settlement plan to exercise up to **15,072** stock options[183](index=183&type=chunk)