Core Insights - Waste Management, Inc. (NYSE:WM) is recognized as one of the 15 Best Long Term Stocks to Buy according to Reddit [1] - Wells Fargo initiated coverage on Waste Management with an Overweight rating and a price target of $238, projecting approximately 20% growth in unit profitability and about 40% improvement in free cash conversion over the next two years [2] - In Q3, Waste Management reported $6.4 billion in revenue, a 15% increase year-over-year, although operating income decreased by 12% to $989 million due to noncash expenses [3] Business Strategy - The company is advancing its landfill gas-to-energy strategy, which captures methane from landfills and converts it into renewable natural gas, providing a carbon-neutral alternative to fossil fuels [4] - Acquisitions are a key growth driver, with Waste Management spending $7.2 billion to acquire Stericycle, enhancing its position in the healthcare waste sector and enabling operational efficiencies [5] - Waste Management's core operations encompass the entire waste management process, including collection, transportation, recycling, landfilling, and treatment [6]

Core Insights - WM reported strong second-quarter 2025 results, with adjusted earnings of $1.92 per share, exceeding the consensus estimate by 1.6%, and total revenues of $6.4 billion, surpassing expectations by 1.4% and increasing 19% year-over-year [1] Financial Performance - The company's effective pricing and cost control strategies are crucial for profitability, focusing on aligning price adjustments with service quality and demand while optimizing operational processes [2] - WM has consistently paid dividends since 1998, with payouts increasing from $970 million in 2021 to $1.21 billion in 2024, indicating a commitment to long-term shareholder value [3] Strategic Moves - The acquisition of Stericycle is expected to enhance WM's earnings and cash flows within a year, with anticipated annual run-rate synergies exceeding $125 million, positioning WM favorably in the medical waste industry [4] Financial Challenges - The Stericycle acquisition has increased WM's debt load, raising concerns about financial flexibility and potential impacts on shareholder returns if cash flow does not meet expectations [5] - WM's liquidity appears weak, with a current ratio of 0.86 in Q2 2025, down from 1.07 in the previous year, indicating challenges in covering short-term obligations [6]

Core Viewpoint - Waste Management is highlighted as a reliable investment opportunity with a strong market position and growth potential in the waste and recycling industry, despite the current hype surrounding AI and quantum computing stocks [1][2]. Company Overview - Waste Management is the largest waste and recycling company in North America, controlling nearly 20% of the U.S. and Canadian market [3]. - The company operates 262 landfills, 506 solid and medical waste transfer stations, and 105 recycling facilities [3]. Competitive Advantages - Waste Management benefits from significant barriers to entry, including public resistance to new landfills and regulatory protections, which create a wide moat around its operations [4][5]. - The company's brand recognition is superior to its competitors, providing a competitive edge in expanding national accounts and increasing e-commerce sales [6]. Growth Areas - **Sustainability Initiatives**: Waste Management is investing $1.4 billion to build or automate 39 recycling facilities by 2027 and $1.6 billion to construct 20 renewable natural gas (RNG) facilities [9][10]. Management anticipates a 15% sales growth from these initiatives through 2027, generating $600 million in annual free cash flow [11]. - **Healthcare Solutions**: The acquisition of Stericycle for $7.2 billion positions Waste Management to capitalize on the growing medical waste services market, expected to grow by 7% annually through 2028 [12][13]. Management has increased expected synergies from this acquisition from $125 million to $250 million [13]. Financial Performance - Waste Management has a return on invested capital (ROIC) of 14%, surpassing the peer average of 11%, and exceeds its cost of capital of 8% [14]. - The company currently offers a dividend yield of 1.4%, with a history of consistent increases, delivering total returns of 2,230% since 2000 [15][16]. The dividend payout ratio is 46% of net income, allowing room for future increases [16]. Valuation - Trading at 30 times forward earnings, Waste Management is considered to warrant a premium due to its resilient business model, wide moat, growth opportunities, and passive income potential [17].

Group 1: Mastercard - Mastercard has delivered significant returns, more than doubling investors' money in five years and generating 6x returns in ten years [4] - The company processed transactions worth $9.8 trillion in 2024 and has 1.1 billion cards in circulation worldwide [5] - In Q1, Mastercard's revenue grew by 14% year over year, driven by cross-border volume growth of 15%, with an operating margin of 57.2% [7] - The company is innovating with technologies like artificial intelligence, positioning itself well in the shift from cash to digital payments [8] Group 2: Waste Management - Waste Management has generated nearly 50% in total returns over three years, 160% over five years, and 470% over ten years [9] - The company expanded its business by acquiring Stericycle, expecting $250 million in synergies through 2027, which is double its original expectations [11] - Waste Management is focusing on scaling its core operations through acquisitions and has a robust pipeline of opportunities [12] - The company has increased its dividend for 22 consecutive years, demonstrating a commitment to shareholder returns [13] Group 3: BYD - BYD has surpassed Tesla in sales volumes and revenue, becoming the world's largest EV maker with over $100 billion in revenue in 2024 [15] - The company's net income jumped 100% year over year in Q1, indicating strong financial performance [15] - BYD is one of the largest battery manufacturers globally, providing a competitive advantage in costs and supply [17] - The company is expanding rapidly, entering new markets and opening showrooms, which positions it for continued growth [17][18]