Waste Connections (TSX: WCN) stock has remained volatile so far in 2025. The year started on a strong note with this Canadian stock witnessing steady gains, but momentum faltered as volatility in crude prices, coupled with trade and tariff concerns, began to weigh on investor sentiment.
The company operates across a broad range of waste management services, from non-hazardous waste collection, transfer, and disposal to resource recovery through recycling and renewable fuel generation. It also handles non-hazardous oilfield waste treatment, recovery, and disposal in multiple U.S. and Canadian basins, while providing intermodal services for cargo and solid waste containers in the Pacific Northwest.
Recent headwinds have come from lower-than-anticipated contributions from higher-margin, commodity-linked activities. Adding to the pressure were ongoing macro challenges and uncertainty stemming from tariffs. However, management remains upbeat and sees solid growth potential in several areas, including revenue from recent acquisitions, a rebound in commodity-related activity, and rising solid waste volumes. These factors have already started to fuel a modest recovery in the stock.
Further, Waste Connections’s focus on improving employee retention and safety, alongside stronger pricing and disciplined cost control, creates a solid foundation for sustained revenue growth and margin expansion.
While short-term volatility may persist, its strong fundamentals and strategic growth initiatives make Waste Connections an appealing option. Let’s take a closer look.
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Waste Connections poised for long-term growth
Waste Connections appears well-positioned to deliver sustained long-term growth, supported by its solid operating strategy and a focus on markets where it can maintain a competitive edge. Rather than battling for a share in large, crowded urban areas, the company deliberately targets regions where it can achieve high market penetration through exclusive contracts, strategically located assets, and vertically integrated operations. This approach has also led it into specialized niches, such as non-hazardous E&P waste treatment and disposal, which offer similar advantages.
Further, by ensuring its disposal facilities are close to the waste stream, Waste Connections improves operational efficiency and protects margins. This creates a durable competitive moat in its service areas.
Despite macro uncertainties, the company’s revenue rose 7.1% in the second quarter (Q2), driven by higher core solid waste pricing. While overall volumes declined by 2.6%, this was a deliberate trade-off and part of a strategy to shed underperforming contracts in favour of higher-margin business.
Even in the face of softness in commodity-related volumes, Waste Connections has continued to reinvest aggressively in its operations. Looking ahead, the company stands to benefit from any rebound in volumes, particularly at its landfills. Given its high market share in the territories it serves and its broad operational footprint, Waste Connections is poised to capture upside from increased construction activity or other economic drivers.
Notably, acquisitions remain an important growth lever. Year to date, Waste Connections has secured deals adding roughly $200 million in annualized revenue. Further, its balance sheet strength and solid pipeline of acquisition opportunities augur well for growth.
Management sees steady revenue growth in 2025, while its margins are expected to rise, supporting its share price.
Is Waste Connections stock a buy?
While Waste Connections faces macroeconomic uncertainties and is witnessing lower commodity-related volumes, its resilient operating model, targeted market strategy, and disciplined cost management position it well for long-term growth. The company’s focus on high-margin markets, strategic acquisitions, and operational efficiency creates a durable competitive advantage. Moreover, its strong balance sheet provides the flexibility to capitalize on future opportunities. In short, Waste Connections stock is a buy near the current price levels.
