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Sunday, 04/04/2004

Time is Wasting
By Nich Sheldon
WMI - Waste Management Inc

Company Description

Waste Management Inc. is its industry's leading provider of comprehensive waste management services. Based in Houston, the Company serves municipal, commercial, industrial, and residential customers throughout North America.

[Source: Company Press Release]

Reasons to Invest:

I have been watching this week's Drip candidate for quite some time now, but I can wait no longer. Time is wasting away, and entry points are hard to come by in this market of uncertainty. Waste Management Inc (WMI) has finally broken over the top of its five-month resistance of $30.00. On top of that they have 12 major brokers covering their stock, and all of them have a "neutral" to "strong buy" rating. Not to mention a hefty dividend yield of 2.46%.

For the fiscal year ended on 12/31/03, sales grew by 4% to $11.7 billion. Their closest competitors don't even come close to comparing to their market cap (17.57 billion), employees (51,700), revenue growth (3.90%), revenue (11.57 billion), and net income (719 million). WMI currently has a Trailing P/E of 25.06 and a forward-looking P/E of 17.40.

Over the past four weeks, Waste Management, Inc was ranked in the top 30% of its industry. They have a 42-week change of 44.31% and 11.08% relative to the S&P 500.

Recent news developments have been neutral for WMI, and mainly consist of new CEO, CFO, VP and CIO announcements. Therefore I see no need to run on about these rather lack-luster articles.

As I have previously mentioned I have been waiting for the breakout on WMI for about two to three months. WMI opened on Monday (03/29/04) at 28.50, and climbed as high as 31.00 on Friday. Since March of 2003, WMI has been trending from top to bottom of a solid regression channel. Two weeks ago, WMI closed below its regression channel for the first time, but quickly rebounded back into the channel, shooting strait over its long- term resistance of 30.00 on Friday, finally closing at 30.45.

I note a strong buy signal on the MACD indicator, while a fresh bearish crossover is apparent on the Stochastics indicator. I believe that the bearish crossover on the Stochastics indicator has recently formed due to the breakout over strong resistance, which carried WMI into overbought territory. If we can see WMI use this old resistance level as support for new highs, the next psychological resistance level would be at 32, which was resistance for the last six months of 2001. My hope is to see further strength in the stock, and a breakout over 32. If 32 is broken there's no telling how high, or how long, WMI will surf its channel.

I see strong strength in the fact that WMI's 10-DMA has been over its 03-DMA (on the weekly chart) since April of last year. As mentioned in previous articles, when the 10-DMA is resting over the 30-DMA it is generally a good sign of bullishness. On that note, the Monthly chart looks even more impressive, especially since the MACD has been on a buy signal since middle of 2003.

WMI is currently on a Double Top Breakout in respects to its Point and Figure chart. There is a revised price objective of 51.50 on the stock, however I think that is a bit too optimistic, as WMI has not seen the 50+ range since mid 1999. I would be happy to see a return to 43.00, any further upside after that is just icing on the cake.

Waste Management, Inc currently offers an annual dividend of $0.75 per share owned, which I previously mentioned tallies out to a 2.46% yield.

This ends another exciting episode of the DripAdvisor.com Drip of the Week. Stay tuned next week, as we will spotlight another stock worthy of the DripAdvisor.com limelight.

Until Next Week,
Nich Sheldon
Editor

Broker Recommendations

Strong Buy         5
Buy                2
Hold               5
Sell               0
Strong Sell        0

Brokers Covering  12


DRIP Information:
Shares to Qualify = 1
Auto-reinvestment = Yes
Accept Foreign Accounts: Yes
Temper Enrollment: Yes

Min/Max Investment = $50-$100,000/year


Reinvestment Fees - 
Dividend investment fees: 0
Cash investment fees: $5.00 + $0.10 per share
Auto reinvestment fees: $1.50 + $0.10 per share


Transfer Agent:
ComputerShare Investor Svcs.
800-969-1190


Corporate Headquarters:
1001 Fannin St., Suite 4000
Houston, TX 77002
Phone: (713) 512-6200
Email: investorrelations@wm.com




 
 

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