We bet that when you read that headline you thought we were using garbage in a metaphoric sense. We weren’t. We are actually taking about waste management stocks, which the market has been ignoring lately. The two biggest US waste haulers, Waste Management and Republic Services, are down almost 4% this month, way behind the market. Analysts have been souring on the stocks too. However, that is odd considering they have been performing well. Perhaps most interestingly, they have a strong long-term catalyst, which is the growth in the recycling business.
FINSUM: We cannot profess to have any expertise in waste hauling, but there are definitely some interesting mixed signals coming through here. Our instinct is there might be a good contrarian bet here.
‘One man’s trash is another man’s treasure’ is an old saying that could not be more appropriate for this story. The article covers the little-discussed EU garbage economy, or how EU states have a big business going in trash. In particular, those states which do not recycle as much of their waste pay to give their trash to high recycling states who burn it for energy. For example, Austria has a high capacity to use garbage as energy, but its recycling rates are so high that it cannot source enough of its own trash to meet capacity. Therefore, it gets Rome, its southern neighbor, to pay over $100 per ton to remove the city’s trash, which an Austrian energy company then burns and sells as energy—making money on both sides of the transaction. Speaking on the difference between Austrian and Italian trash, a spokesman for the Austrian energy company says “There are a few more spaghetti packages but that’s the only difference to the Austrian trash”.
FINSUM: This is a good system, and one of the areas where the EU seems to work well. Increasing this sort of capacity around the world seems like it would be good for the environment and for business.