# Waste Connections (WCN)



## james4beach (Nov 15, 2012)

I'm surprised we don't have a thread on this. This has been one of my best performing mid cap holdings, now a large cap. It's been hitting new all time highs recently and has, to my surprise, grown to become #18 in the TSX 60 (based on weights in XIU).

WCN did not even exist in the TSX 60 back in 2016, so it's pretty amazing to see it grow to become the 18th largest weight in just a couple years. I think it's an example of how previously unheard of companies grow to become mainstream... an illustration of why stock pickers have to continue monitoring what's out there to pick up the new great stocks.

I still hold WCN


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## like_to_retire (Oct 9, 2016)

james4beach said:


> I'm surprised we don't have a thread on this.


This is a stock that keeps popping up on my radar because its stock price keeps climbing, but whenever I take a detailed look, it always seems overvalued (P/E=48.5x). But regardless, it keeps climbing, so kudos for those that own it.

In fact if I look at Morningstar Quant report right now it has it as only "one star", which translates to "significantly over-valued". Yikes.

I don't know, this is one of these few stocks where they have headquarters in Canada, but everything about their business appears US centric. They even pay their 0.77% dividend in US$. To me, if you want to be a Canadian stock, and attract Canadian investors, pay your damn dividend in Canadian dollars.

ltr


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## humble_pie (Jun 7, 2009)

like_to_retire said:


> this is one of these few stocks where they have headquarters in Canada, but everything about their business appears US centric. They even pay their 0.77% dividend in US$. To me, if you want to be a Canadian stock, and attract Canadian investors, pay your damn dividend in Canadian dollars.



bbbbut most investors _like_ USD dividends though, once they get used to the idea of keeping the shares in an account where the broker won't be able to charge FX fees on the divvies (usually a USD account)

& it was yourself who set forth the reasons for a USD dividend so intelligently & so cogently. Most of such a company's business is in the US of A. It's a market that's 100 times bigger than the canadian market, or maybe 1000 times bigger. The possibilities for growth are mind-boggling. The motto of such a company is Go Big or Go Home.

to further sweeten the deal, most companies can arrange for their registered shareholders to receive their dividends in CAD, converted at the company's expense at spot rates, if any such shareholder would so insist.

of course they can't do this for their discount broker clients who hold their shares in street form at brokers; but all in all one could not really fault these companies for any lack of trying to do their best, could one?


.


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## like_to_retire (Oct 9, 2016)

humble_pie said:


> bbbbut most investors _like_ USD dividends though..


Not me. I like dividends in Canadian dollars. This is Canada. If it's a Canadian company, pay me in our own currency. I don't want dividends in US$ or Japanese Yen or European Euros. Do US companies pay in Canadian dollars - of course not - it's goofy.



> of course they can't do this for their discount broker clients who hold their shares in street form at brokers; but all in all one could not really fault these companies for any lack of trying to do their best, could one?.


Paying me in a foreign currency isn't their best. Their best would be in Canadian dollars. Many people feel this way. James is surprised why there's no thread on this company. There you go.

ltr


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## doctrine (Sep 30, 2011)

A garbage (literally) company trading at 5 times revenue, 40 times earnings, and 3.5 times book value on the backs of an amazing 6% revenue growth year over year. 

It's a good company, but almost all of the amazing return in the last 3 years has been from the P/E multiple going from 20 to 40. This has the hallmark of the Dollaramas and New Flyer Industries, it looks good until it doesn't. 

This trades at almost double Google's valuation; maybe not a fair direct comparison, but Google is far less capital intensive, with a far stronger moat, and far stronger revenue growth and half the P/E. The takeover value of WCN is maybe $50 a share.


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## james4beach (Nov 15, 2012)

doctrine said:


> It's a good company, but almost all of the amazing return in the last 3 years has been from the P/E multiple going from 20 to 40. This has the hallmark of the Dollaramas and New Flyer Industries, it looks good until it doesn't.


It's the hallmark of the entire US market though, isn't it? The cyclically adjusted PE for S&P 500 went from about 15 to currently 30, the same 2x P/E expansion. So while I agree with your comment about huge P/E expansion ... it's no different for the rest of the stock market.

Let's not pretend that P/E doubling is out of the ordinary. That's the whole stock market... it's the whole game.


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## doctrine (Sep 30, 2011)

It's not out of the ordinary, but it can certainly come crashing down in a hurry - just like Dollarama and New Flyer that I mentioned above. There are undervalued sectors, like Canadian finance and energy. "But oil and housing" is usually what I hear when people stay away. You don't get good value without some risk. But when the risk isn't realized, you get rewarded, often with P/E expansion. 

With WCN, someone already got rewarded for risk of owning a garbage company that grew 10% a year for 5 years - there is no material upside nor is this stock likely to move to a P/E of 80.


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## james4beach (Nov 15, 2012)

Very possible, and I agree one has to monitor these to catch a reversal in their growth. If I feel the growth has ended I will abandon it, just as I would abandon any stock whose prospects have turned negative.

Currently though, WCN shows up in a lot of excellent portfolios. It's one of the largest weights in both XIU and ZLB. We all already own it; I'm just bringing attention to its rise.


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## john.cray (Dec 7, 2016)

Trying to figure out what currency one would be getting dividends from WCN if one purchased WCN on the TSX in the CAD portion of their account and in a Canadian Brokerage.

According to http://wasteconnections.investorroo...ons-Announces-Regular-Quarterly-Cash-Dividend


> Shareholders of Waste Connections whose common shares are held by a bank or broker that participates in U.S. depositary DTC will receive payment of their dividends in U.S. dollars. Shareholders of Waste Connections whose common shares are held by a bank or broker that participates in Canadian depositary CDS will receive payment of their dividends in Canadian dollars, calculated based on the Bank of Canada's daily average exchange rate on March 1, 2019


James, do you hold WCN in iTrade and in CAD currency? What is the currency of the dividends that you receive them in?


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> ... WCN did not even exist in the TSX 60 back in 2016, so it's pretty amazing to see it grow to become the 18th largest weight in just a couple years.


I applaud your enthusiasm as well as encouraging people to look at more than the top stock but your claim of "just a couple of years" is suspect at best.

Unless Yahoo is suddenly including in TSX historical quotes times when WCN was on a junior exchange - "a couple of years" is from 2002 to today. For the NYSE, it's 1998 to today. 




james4beach said:


> ... I think it's an example of how previously unheard of companies grow to become mainstream... an illustration of why stock pickers have to continue monitoring what's out there to pick up the new great stocks.


Sounds more like RIM when the media noticed it after employees had been retired for almost ten years based on their stock options.

I'm all for monitoring/looking but let's not mislead people about how long the company has been listed.


Cheers


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## james4beach (Nov 15, 2012)

Eclectic12 said:


> I applaud your enthusiasm as well as encouraging people to look at more than the top stock but your claim of "just a couple of years" is suspect at best.


I understand that the stock has existed for a long time, but I never made any claim about how long it's been listed... read my text again.

What I wrote above is that the stock did not exist in the TSX 60 until just a couple years ago. I have the annual statements of XIU so I can say definitively that WCN first appeared in XIU in 2017, not before. And I think it was added to the TSX Composite only in 2016, but I'd have to look again to be sure.

How exactly was my statement misleading?

Of course there are those who heard about the stock long ago, but going by its date of inclusion in the major TSX indices, I'd say that it only became high profile and highly visible a couple years ago.


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## james4beach (Nov 15, 2012)

john.cray said:


> Trying to figure out what currency one would be getting dividends from WCN if one purchased WCN on the TSX in the CAD portion of their account and in a Canadian Brokerage.
> James, do you hold WCN in iTrade and in CAD currency? What is the currency of the dividends that you receive them in?


I hold WCN on the Canadian exchange, in CAD within TDDI. The most recent dividend showed as: WASTE CONNECTIONS INC-NEW CONVERT TO CAD @ 1.31750

So I think this means that they pay dividends in USD. Because I hold it in a CAD account, the brokerage converted the USD to CAD and deposited my dividend (after conversion fee) as CAD cash.


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> I understand that the stock has existed for a long time, but I never made any claim about how long it's been listed... read my text again.
> What I wrote above is that the stock did not exist in the TSX 60 until just a couple years ago ...
> 
> How exactly was my statement misleading?


Because the way I read it ... the implication is that it was only worthwhile since being added to the index. Waiting that long means one loses out out two cycled from $13 to about $40.

Part of the performance you are celebrating is that after being added to the index, all of the index tracking MFs and ETFs etc had to buy it. Similar to what I have observed with other stocks that weren't part of the index that were then added. 


Cheers


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## james4beach (Nov 15, 2012)

Ideally, I think one should look for these kinds of stocks before they're added to the index. However I don't believe it's too late once it's in the index.

Back in 2000/2001 for example, CP was a tiny weight in the index compared to BBD.B. Bombardier was a giant even in 2001, over 3% of XIU whereas CP was less than 1% of XIU. Looking back at the 2001 holdings, in fact another tiny industrial sector holding was CAE. If I then look at performance since then, even starting at a local high, CAE outperformed the TSX, and CP extremely outperformed the TSX. Both performed very significantly better than BBD.B.

I didn't mean to imply that stocks are only worth holding if they are in the index. If you can find the stocks at an earlier stage, go for it. Even looking at the index holdings can be useful (as in the example above). Something that may be a minor weight, or new addition to the index could go on to become a star performer.


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