Unlike Covanta that has been willing to own and operate, Waste Management has kept to what it knows best, waste collection and handling. Instead Waste Management has used joint ventures to dip its toe into the waste-to-energy field. In March 2014, Waste Management announced a team-up with Ventech Engineers International, NRG Energy (NRG: NYSE) and Velocys Plc (VLS: LSE) to produce renewable fuel from methane gas coming from landfills. Ventech and NRG will provide engineering and project management functions, while Velocys brings the gas-to-liquids technologies to the table. Waste Management just has to keep the waste coming and make gas from its landfills available for processing.
WM offers a dividend yield of 3.2% at the current price level. Although is not so impressive as the yield offered by Covanta even at its pumped up price, WM shares are trading at a more modest multiple of 19 times its 2015 projected earnings. That is about on par with the average for the S&P 500 Index, making WM look quite affordable. A review of historic trading patterns suggests the stock has developed considerable upward momentum, set off in late July by a triple top breakout seen in the 'point and figure' chart for WM. The stock has been unfazed by the recent sell-off observed in the broader market in September and early October. WM has continued its march higher without only minor pulls back from a new 52-week high set in mid September. WM is also a fairly stable stock, with beta measure of 0.64. Thus WM could give income-conscious investors an appealing dividend and a relatively stable and compellingly priced stock. Oh, and you get some biogas with the bargain.