The U.S. and global recycling trend has not only continued – its intensifying. In fact, communities are starting to shift from a theory of 'low waste' to a theory of 'no waste' – recycle or reuse everything, which is why I'm Reiterating my Buy rating for Waste Management (WM), first recommended on March 25, 2009 at a price of $25.74. If you bought WM in March, you're up about 26%.Waste Management posted Q3 EPS of 54 cents, 1 cent above the First Call Q3 EPS estimate of 53c. Institutional investors (IIs) are looking past WM's likely 2-4% revenue decline in 2009 to volume growth in 2010, as demand for both trash and recycling services increases as the U.S. economic recovery gains steam. The First Call FY2009/FY2010 EPS estimates for WM are $1.95 to $2.13.
Technically, Waste Management's stock chart reveals a mild uptrend: the gains have been modest in the past six months, but the direction is up, with quick recoveries from two breaches of the key, 50-day moving average: that suggests IIs are swooping-in to buy WM's dips – a bullish sign.
Stock Analysis: Waste Management is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in WM now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your WM position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $17.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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