GFL Environmental Inc. (GFL.TO)

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.

Wonderful business run by really good people. Recurring cashflows. Trades at lower multiple than major competitors and growing faster. Lots of chances to improve operations.

The space has been a fantastic investment. There aren't a lot of options for getting rid of garbage. Once you're on their books, they can gradually increase prices. The issue is that valuations are quite high, and always have been. High barriers to entry. When stocks come off, the expensive ones come off the fastest.

This name's valuation is slightly better than others.

Terrific management. Market's underpriced it because it grows by acquisition, and has taken on a bunch of debt. They've put an asset up for sale, probably earning $6B, and debt will come down. Just as profitable as competitors, but trades at a discount. Yield is 0.1%.

Environmental services as a group have been performing well. Recently turned profitable. Lots of opportunity for consolidation. Technically doing well in a sloppy market.

EPS was essentially flat vs expectations of a tiny loss. Revenue of $1.8B beat estimates by 1.2%. EBITDA of $455.7M beat by 3.4%. GFL's revenue, Ebitda and free cash flow exceeded consensus, reflecting benefits from last year's solid-waste divestitures and efforts to shed low-margin contracts. Reported revenue was flat due to the 2023 divestitures but included 4% organic growth in solid waste, where price increases offset volume declines, and which drove 160 bps of segment margin expansion. Environmental Services revenue fell 10% organically amid reduced emergency-response activity. Free cash flow topped expectations, though GFL's net leverage rose to 4.3x due to a $322 million increase in debt. The company used C$112 million for acquisitions and expects to spend C$600-$650 million on deals for the full year. However, net leverage is still seen approaching 3.65-3.85x by year-end. Guidance WAS increased, but only marginally. The stock is not cheap at 44X earnings, but we still think it is buyable. 
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Very prominent brand (visible across Canada). Stock performance strong. High debt levels a concern. Unsure of future business given leverage. If debt falls, would expect better returns. Cheapest valuation in waste management space, however investors have to weigh risk of debt levels. Earnings very stable (sticky customers) with steady demand. 

GFL operates a playbook of growing through acquisitions with a leveraged balance sheet, by consolidating small players in one industry (waste management). This playbook is usually referred to as a “roll-up”. GFL’s CEO has demonstrated a decent history of execution in the last few years, with 5-year revenue growth of around 18%. He also writes a good shareholder letter. As the founder, he has certainly delivered growth, with sales up 10X since 2015. This article from last year is a good read on him. GFL continues to reinvest heavily into growth. Due to the stability of the indusry, and recurring nature of the business, the debt level is quite high, with net debt/EBITDA consistently more than 5.0x. Valuation is reasonable compared to the historical average, 14.1x EV/EBITDA (historically range from 13.8x to 19x). Overall, a decent name, but investors need to be comfortable with the debt level and entrust the CEO with his capital allocation skills.
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There's room for growth as society puts more effort into disposing waste. A little volatile. Collecting garbage is moving towards automation. Operates in an essential, but growing sector.