Nobody likes taking out the trash. Fewer people aspire to start a waste collection business. That bodes very well for those businesses that do collect our waste. They operate with very little competition and as far as I know, 100 years from now, people will still be taking out trash. Despite any technological advances, waste will always exist.

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Waste Management
The time is ripe to consider waste hauling businesses. The economic recession has hurt the share prices of theses businesses, but the long-term prospects of the industry hasn't really changed at all. The big daddy in the space is Waste Management (NYSE:WM). The company has one of the largest established networks of hauling routes, dumpsters, trucks and collection centers. The network that these assets have built for Waste Management would be extremely tough to replicate today. Shares trade at 15 times forward earnings along with a 3.80% yield that you can take to the bank.

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Republic Services
Another quality player in the business is Republic Services (NYSE:RSG). Republic owns 193 waste landfills, 204 transfer stations and 76 recycling facilities that provide waste collection services for millions of customers through 348 hauling companies in the U.S. and Puerto Rico. Shares trade for around $29.69 or a market cap of $10.98 billion. Today one is paying 1.35 times price to sales generating over $8 billion that would cost substantially more than that to replicate. And in this case, intangible assets, like customer relationships, are clearly worth something.

Casella Waste
A much smaller player is Casella Waste Systems (Nasdaq:CWST), with a market cap of about $183 million, but a highly levered balance sheet with about $470 million in debt. The only investment case for Casella today would be that it be bought out by one of the bigger players. At the current market cap, Casella trades for a fraction of the nearly $460 million in annual sales. Being a part of a larger enterprise, Casella's net losses could benefit from operating efficiencies. The $645 million EV price tag gets you 31 solid waste collection operations, 30 transfer stations, 34 recycling facilities, and other valuable assets.

One Man's Trash is Another's Treasure
Very few businesses offer the stability of waste collection and disposal. It just so happens that the two dominant players are very attractively priced for the long term today. (For more, see Save The Earth: Become A Capitalist.)


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