Top waste stocks to watch

What's on this page?

1. The world of waste
2. How to buy waste stocks
3. Top waste stocks to watch
4. Top waste stocks to watch summed up

The world of waste

Waste is a growing problem for the world. Burgeoning populations and urbanisation mean the world is on track to produce over 3.4 billion tonnes of waste annually by 2050, up a staggering 70% from the 2 billion tonnes produced in 2016. ‘Urgent action’ is needed to avoid this, according to the World Bank.

And while waste is still a huge burden for counties around the world with the vast majority of rubbish still being sent to landfill, the opportunity to turn it into an asset has never been greater.

A wide range of companies are trying to tackle the challenge in numerous ways, whether it be by increasing the amount that can be recycled, creating more biodegradable plastics, or converting waste into energy and fuels that can help power a world that is trying to tackle climate change.

Figures from Statista suggest the global waste management market, covering the collection, transportation, processing and recycling of rubbish, will be worth $530 billion by 2025 – 60% higher than 2017.

Read more: Who will be the winners and losers of the crack-down on single-use plastics?

The fundamentals of the market are strong. Waste is a huge problem for developed nations, which produce far more waste than the developing world despite accounting for a fraction of the population. The need to reduce and recycle waste has never been greater, and although recycling rates have improved markedly, they still only reuse about one-third of their waste.

Meanwhile, waste will continue to become a growing issue for developing nations as their populations rapidly grow and more people move into towns and cities.

For example, Sub-Saharan Africa is expected to produce three times as much waste per year in 2050 than it is now, and only 4% of waste is recycled in low-income countries. There will always be waste and, unless we want it to sit in landfill, those companies that are finding uses for it are onto a long-term winner.

The coronavirus crisis could propel the industry forward. Many countries, including the UK, have realised there is an opportunity to ‘build back better’, investing more into green projects and infrastructure that can not only heal the economic wounds of the crisis but push them closer to their climate goals.

How to buy waste stocks

With IG, you can trade on the best trading platform and back whether you think shares will rise or fall in value. Go long (buy) if you think they will increase in value, or go short (sell) if you think they will decrease in value.

To take a position, follow these simple steps:

1. Create an IG trading account or log in to your existing account
2. Type the name or the ticker/code of the stock you want in the search bar and select it
3. Choose your position size
4. Click on ‘buy’ or ‘sell’ in the deal ticket
5. Confirm the trade

You can also buy and hold shares with IG’s share dealing platform.

Top waste management and recycling stocks

Waste management is at the heart of the industry. It covers the traditional players that collect, process and store waste from commercial premises and households, and those that collect more difficult materials like industrial or hazardous waste. It also covers the recycling sector that is trying to find uses for as much waste as possible. These companies have been selected as some of the largest in the sector.

1. Biffa
2. Renewi
3. DS Smith
4. Waste Management
5. Republic Services

Biffa

Biffa is a familiar name in Britain. It is one of the largest waste management companies in the country and, unlike many of its rivals, it solely concentrates on the UK market. It has nearly 200 sites across the country, and it collects 15,000 tonnes of waste every day. It is also the largest collector of commercial and industrial waste.

The fact it has such vast access to waste means the opportunity for Biffa is considerable if it can find good use for as much of it as possible. The company has delivered strong rates of both organic and inorganic growth since 2014 and has acquired dozens of businesses – a strategy it continues to grow market share and expand.

In ESG terms, the company has made significant progress; carbon dioxide emissions have fallen by 28% since 2019, while it has recycled some 130,000 tonnes of plastic.

In its last financial year, the company generated statutory revenue of £1.44 billion, with a 2.9x leverage ratio — but retained a £596 million net debt position. CEO Michael Topham was ‘delighted with the progress we have made in the face of yet another eventful and challenging year.’

Renewi

Renewi was formed in 2017 when UK outfit Shanks Group merged with Dutch firm Van Gansewinkel Groep, creating a force in Europe where it has nearly 200 sites. The Benelux – home to Belgium and the Netherlands – is at the heart of the business and contributes the lion’s share of the revenue, with the UK being its next biggest market and supplemented by smaller operations in France, Portugal and Hungary.

Much like Biffa, it collects waste from companies and factories but, unlike some of its peers, it recycles the majority of it. In fact, Renewi claims to have the highest recycling rate in the industry.

It owns the waste it collects, so turning it into useful products makes business sense. It makes everything from paper, metal and plastic to glass, compost and energy. Ultimately, this means it not only manages waste but also a producer of raw materials. For context, it remains the largest waste-to-product company in Belgium and the Netherlands.

In its 2024 full year results, the company generated revenue of €1.7 billion and underlying EBIT (earnings before interest and tax) of €105.5 million from continuing operations - down on last year's figures of revenue of €1.7 billion and underlying EBIT of €131.7 million. Renewi made a pre-tax loss of €30.9 million during the period, versus profits of €66.6 million last year, due to lower profits and incurring an exceptional charge of €64.5 million on the sales of its UK Municipal business to Biffa. Meanwhile, net debt stood at €368.1 million at the year end, down from €370.6 million last year, or 2.1x EBITDA (earnings before interest, tax, depreciation and amortisation).

CEO Otto de Bont said: ‘The sale of UK Municipal to Biffa delivers on our commitment to optimise our portfolio and strengthen our core business. This is a transformational moment for Renewi which will enable us to unlock substantial profit and cashflow improvements and improve shareholder value.'

DS Smith

DS Smith is primarily a packaging company that helps sectors like the fast-moving consumer goods (FMCG) develop better packaging solutions for their products. However, it makes it onto this list because it is Europe’s largest cardboard and paper recycler. DS Smith follows what it calls a ‘supply cycle strategy’ that aims to provide an end-to-end service that collects and recycles paper and cardboard and turns it into new products before starting the entire process again.

That means the paper and cardboard it produces goes back into the system and is reused over and over again to create a ‘real closed loop recycling solution’. This also means DS Smith is not only a vital partner for companies that produce a lot of paper-based waste, but also for those looking for more sustainable packaging.

DS Smith operates globally but is centred in Europe, which accounts for the vast majority of its revenue. In its recent half-year results, revenues fell by 18% to £3.5 billion due to challenging trading conditions, while the company said adjusted operating profit of £365 million (£418 million in the same period last year) remained "robust" given the tough environment. Like-for-like box volumes fell by 4.7% in the first half, although the second half is seeing "positive momentum" and pricing has remained strong. In a more recent trading update, DS Smith said this positive momentum had continued.

CEO Miles Robert told investors: 'I am pleased with a continuing resilient performance, despite tough economic conditions. Our strong customer relationships, quality and service has led to a number of recent FMCG [fast moving consumer goods] customer contract wins, underpinning our confidence in the outlook for volume growth going forward. While markets remain challenging, we continue to focus on providing value-added solutions to our customers and on driving operational efficiency and cost control across the Group and view the future with confidence.'

Waste Management

Aptly named, Waste Management (WM) is arguably the largest company in the world operating within the sector. It is, by a wide margin, the leading provider of comprehensive waste management services in North America, providing services that range from collection and disposal to recycling and renewable energy generation.

Backed by the Bill & Belinda Gates Foundation Trust, which is currently the second-largest shareholder, the firm has grown sharply over the past few years due to acquisitions and organic growth — and also benefits from climate change economics as it sells credits to other carbon emitters.

For context, March saw global ESG leader Ethisphere name WM as one of the world’s most ethical companies in 2024 — the 15th time this has happened. President and CEO Jim Fish noted that ‘this award is a testament to the focus and value we've placed on ethics and compliance as well as environmental and social impact while continuing to grow the company.’

In financial terms, Waste Management has seen annual revenue rise from $15.4 billion in 2019 to more than $20.4 billion in 2023. And net income has jumped from circa $1.6 billion to more than $2.3 billion over the same time frame. In the first quarter of 2024, it delivered revenues of $5.2 billion versus $4.9 billion in the same period in 2023.

Republic Services

Republic Services offers environmental services in the United States and Canada— including the collection and processing of recyclable, solid waste, and industrial waste materials — alongside the transportation and disposal of non-hazardous and hazardous waste streams and other environmental solutions.

It’s typically viewed as the second-largest waste management company in the US after Waste Management by most metrics. It boasts 74 recycling centres across the country and processes 5 million tons in its recycling centres. It also has 73 renewable energy projects at present, with 20% of its fleet now powered by natural gas.

In 2023 full-year results, net income rose to more than $1.7 billion. Meanwhile, in its recent first quarter results, revenues grew by 8% to $453.8 million versus $383.9 million in the same period the previous year.

Jon Vander Ark, president and chief executive officer, told investors: 'We are off to a strong start to the year and well-positioned to achieve our full-year goals. Continued pricing in excess of cost inflation generated double-digit growth in EBITDA and EPS, and expanded EBITDA margin by more than 100 basis points. Solid execution by our 42,000 team members and investments in our differentiating capabilities — Customer Zeal, Digital and Sustainability — continue to produce positive results, and support our ability to deliver ongoing profitable growth.'

How to invest or trade in waste stocks with us

1. Learn more about growth stocks
2. Open an account with us or practise on a demo
3. Select your opportunity
4. Choose your position size and manage your risk
5. Place your deal and monitor your trade

You can either invest in shares directly or trade using spread betting or CFDs to benefit from leverage.

Keep in mind, leverage means you can gain or lose money faster than expected. Because your position size is far greater than your deposit, you could lose more money than you put in. Be aware also that past performance is not an indicator of future returns.

Learn more about the differences between trading and investing here.

Top waste stocks to watch summed up

The above five companies are just a small selection of top waste stocks to watch. Remember that big companies can also fail and always do your own research.

Trade and invest in over 17,000 UK, US and global shares from zero commission with us, the UK’s No.1 trading provider.* Learn more about trading or investing in shares with us, or open an account to get started today.

*Based on revenue excluding FX (published financial statements, October 2021).