With just two big players left standing in the trash collection industry, Todd Ahlsten, manager of the Parnassus Equity Income Fund, likes his chances with Waste Management. "They have only one major competitor now," he says, referring to Republic Services, which recently united with Allied Waste. Ahlsten likes the fact that WMI isn't "distracted by a merger." In 2008, the company generated more than a billion dollars in free cash flow; it has hiked its dividend for more than ten consecutive years.
Ahlsten notes that Waste Management is naturally hedged against variations in commodity prices. "When oil goes up, they can pass through the prices as fuel surcharges," he says. "And when other commodities rise, their recycling business benefits."
--M.K.
