GFL Environmental Inc. (GFL.TO)

Loves the sector, a more defensive industrial space (we need garbage disposal whether the economy is up or down). Stock came down as the market hated SES purchase. Take-private rumours (not the first time). A lot of ifs. She's not interested.

She prefers WCN. Safer industries, better management. 

Riskier and lower-quality in the space. Broadly speaking, waste is a need and not a want. Non-discretionary, non-cyclical. SES is a good business, but more cyclical -- regional, plus narrow focus on oilfields. Safer bet is to sell your shares before the deal closes.

He prefers, and owns, WM. Higher credit rating, more conservatively run, better mix of businesses.

Likes the business for being stable and reliable. We all need garbage pick-up. GFL is good at buying companies and growing. No issues with it. Good overall.

Making an acquisition by issuing shares often ends up being dilutive over time. He prefers a successful company to return excess capital to shareholders by decreasing the share count.

To be fair, stock's done really well. Great business. Diversified and grown. Bit more leverage than he likes. Trying to corner the market in some areas.

If it's a small position in a registered account, don't worry about it. If you have a small capital loss in a taxable account, good time to move on and wait for issues to resolve.

It picks up garbage, municipal and business. Has a good long term business model with good cash flow. Its core business is doing well and it recently bought Secure which fits well, is accretive, and generates lots of cash. They own 70% of the market and have great management. There is lots of opportunity to consolidate the market and he is looking for a double.

Likes the recent deal, while US brokerages hated it. SES is a pretty good company, and didn't pay a lot for it. 

Type of business he'd like to own at the right price. He'd like to see a higher dividend yield. Pretty well run. Drop in the stock argues for potential upside.

Waste services is defensive and so attractive, but valuations have jumped. For this acquisition with SES, GFL issued shares and paid a full valuation, which is why shares sold off. But his problem has always been GFL's weak balance sheet. But the deal is strategic.

 Chart says it's very oversold. Is attractive around US$30-35. It will likely fall more. 

Whole sector's underwater. This company is facing actual shootups and fires. Concerns over debt, especially if interest rates rise (he doesn't think they will). Will move beyond the debt. Turnaround at some point.

He owns WCN instead.

Essentially the same business as WCN. We're in a cyclical risk-on environment, and GFL is more defensive. The 3-year chart shows the bigger uptrend, and how we're now in a downtrend. On the 5-year chart, he can highlight the positive longer-term trend. 

Still likes it longer term. There will be some consolidation here, and likes an entry point around current levels. Will probably go sideways for most of this year. Pretty decent support close to where we are around $60. Likes industrials right now, but this is a more risk-off industrial and it'll start to shine once we head into 2027.

To add, be patient and look for a turnaround in conviction. Has never hit analyst targets over last 5 years, which tells her that people are overly optimistic on the stock. Analysts do seem to be positive -- see it as a rollup in transition not as a finished compounder. Grew quickly, and investors were concerned about leverage and integration risk. Management has shifted from growth to simplification and de-leveraging -- has helped sentiment, but she prefers more predictable operators until that happens.

Business is solid, waste is non-cyclical and pricing is resilient. But execution matters. With volatility, hasn't yet earned a "sleep at night" multiple.

Her exposure in the space is via WM and RSG.

If he didn't already have enough, he'd be actively buying. On headline earnings, looks expensive, but earning cashflow like it's going out of style. Waste management business is great. Acquisitions are done well; very long runway, especially in the US where they add smaller operators (gives them the scale to make a lot of $$).

If he's holding something, it means he'd still buy it today. Sold one business last year, generated lots of cash to bring finances in line. Lots of cashflow to reinvest in the business. Expects strong profitability over next few years, with 20% for at least next 3 years.