The solid waste and recycling industry is evolving beyond just curbside collection, with leading companies showcasing strong business models characterized by pricing power, predictability, resilience, and steady earnings growth. However, the structural drivers behind these advantages are often overlooked, especially amidst concerns over high valuations and limited upside reflected in sell-side ratings.

Solid Waste and Recycling—One Man’s Trash Is an Investor’s Treasure delves into the current and future U.S. landfill capacity situation, revealing that nearly half of all open municipal solid waste landfills, which handle over half of all annual waste, are expected to close by 2050. This is particularly concerning for the Northeast, where waste exports to other regions are already increasing.

As waste generation grows alongside population and economic activity, a tightening imbalance between waste generation (demand) and landfill disposal capacity (supply) is anticipated. This scenario highlights three main structural themes impacting North American waste and recycling companies.

First, we believe vertically integrated owners of existing disposal assets will maintain strong pricing power in their collection and disposal businesses, leading to consistent price-led revenue growth and margin expansion despite muted volume growth.

As landfill options become limited and costly, more sustainable and circular alternatives, like recycling and other waste diversion methods, will gain importance. Additionally, landfill byproducts such as methane will increasingly be used and monetized, supported by regulatory backing for renewable natural gas (RNG).

Finally, ownership of scarce, hard-to-replicate assets at scale will enable the largest waste and recycling companies to strengthen their competitive positioning in a complex and costly operating environment. This will create opportunities for consolidation and investments in efficiency.

For more information about William Blair’s global services research, please contact us or your William Blair representative.

Listen to the William Blair Thinking Presents podcast episode: Why One Man’s Trash is an Investor’s Treasure