I like stocks that have forecasts of increasing of both sales and earnings along with recent positive price momentum and today Waste Connections (WCN) fits that criteria. Waste disposal is a service we all need and I don't see that need going away. During the last few years there has been a lot of consolidation and pricing pressures in the industry but this seems to have run its course. Industrial output decreases have also meant a decrease in industrial waste. Now that there are fewer competitors and an inkling that industrial output is about to return this industry should benefit from an increase in revenue.
Please look at the chart provided by Barchart of recent price momentum vs. its 20, 50 and 100 day moving averages and see if you agree:
Barchart technical indicators:
- 88% Barchart technical buy signal
- Trend Spotter buy signal
- Trades above its 20, 50 and 100 daily moving averages
- Up in 5 of the last 5 sessions and increased in price 11.84% last week
- The Relative Strength Index is 66.72% and rising
- Barchart computes a technical support level at 33.47
- Recently priced at 34.66 which is above its 50 day moving average of 32.09
Summary: I like the environmental disposal industry and think Waste Connections (WCN) will be a player there in the next year. Since they have begun to benefit from some of the cost savings of recent acquisitions and consolidations investors have experienced a 28% total return over the last year. Going forward at today's price I think an annual total return of 11% - 13% over the next 5 years will be more realistic
Jim Van Meerten is a Marketocracy Master
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