Whether you're a sailor or a stock trader, when the waters get rough you'll start looking for a safe haven,
The earliest documented use of the expression "safe haven" — a place where you are protected from danger — dates back to the mid-1500s, but the concept has been around ever since human beings first started looking for higher ground.
For stock traders, safe-haven investments are those expected to hold or increase in value during periods of market uncertainty or economic downturn.
Now, unless you've been living on Neptune for the past few weeks, you'll know that the market has whipsawed through a storm of uncertainty after President Donald Trump starting slapping tariffs on just about everything, including penguins.
The Commerce Department estimated that the U.S. economy shrank during the first three months of 2025, its worst performance in three years.
Several economists have raised their recession forecasts in recent weeks, while a Reuters study found that roughly 40 companies worldwide, across industries, have pulled or lowered their forward guidance in the first two weeks of first-quarter-earnings season.
Waste Management shares have climbed 16% since the start of the year.Shutterstock
Portfolio manager says WM pricing remains firm
Chris Versace, lead portfolio manager for TheStreet Pro Portfolio, is looking to steer investors toward safe haven companies during these turbulent times.
One such company is Waste Management (WM) , the Houston environmental-services company, which recently reported first-quarter results.
The company, which does business as WM, provides environmental services to nearly 21 million residential, industrial, municipal and commercial customers in the U.S., Canada and Puerto Rico.
"With Waste, we continue to favor the sticky core business that has pricing power and incremental margin opportunities, plus ample room to drive margins at the health-care solutions business higher," Versace said in his TheStreet Pro column.
On average, roughly two billion metric tons of waste are generated each year, and this figure is expected to grow over the coming decades, according to Statista.
The demand for waste removal and disposal is largely unaffected by economic fluctuations, making it a relatively stable and predictable industry.
WM shares are up 16% since January and up 13% from a year ago.
"Waste Management delivered March-quarter earnings per share of $1.67, nicely ahead of the $1.59 consensus, on revenue that rose almost 17% year over year to $6.02 billion, a wee bit shy of the $6.1 billion market forecast," Versace said.
He noted that winter weather hurt waste volumes during the quarter. Industrial hauls at WM slowed — "not surprising given what we’ve seen in the monthly manufacturing [purchasing managers index] data."
"Pricing remains firm and the continued rollout of automated truck routes continues to benefit waste-segment margins," Versace said.
Health care a WM opportunity: Versace
In November, WM completed its $7.2 billion acquisition of Stericycle, expanding the company's footprint in health-care-waste management. The unit is being rebranded as WM Healthcare Solutions.
"While the company reiterated its 2025 outlook, we expect a more granular update on its second-half 2025 prospects, including steps to boost margins at the recently formed WM Healthcare Solutions business," Versace said.
WM Healthcare Solutions, accounted for about 10% of the quarter’s revenue with adjusted margins that were roughly half those for the waste business.
"To us, that margin difference is one of the opportunities for the Waste Management team, and at the company’s upcoming June 24 Investor Day, we look forward to more detailed integration plans and cost savings initiatives," Versace said.
"That includes a granular look at achieving $250 million in annual run-rate synergies by 2027."
Analyst hopeful about WM Investor Day
Several investment firms issued research reports after WM posted its quarterly results.
Raymond James lowered the firm's price target on WM to $255 from $258 and affirmed an outperform rating on the shares.
WM's multiyear campaign to deploy capital toward sustainable projects adds substantive incremental opportunities for earnings and free cash flow to the story in out years, the investment firm said.
Raymond James said that a solid pricing, volume and cost-control outlook at WM could drive margins wider and free cash flow higher over time.
Citi raised its price target on WM to $271 from $260 while maintaining a buy rating on the shares.
The Q1 results were largely in line with the Wall Street consensus but didn't meet the high bar set by peers, the investment firm said.
However, Citi said that it was optimistic the upcoming June Investor Day could highlight WM's revenue synergies and long-term growth ambitions.
Versace said he'll be looking "for more comments about the quarter when the Waste Management team presents at the Stifel 2025 Investor Summit on May 5.
"In the meantime, if the shares found their way back to the $215 level, we would be interested buyers at those levels."
Versace reiterated a $245 price target on WM shares, indicating 5.2% potential upside from the close on May 1.
