3 Waste Removal Services Stocks to Monitor Amid Industry Woes

The waste management sector is projected to grow from $1.2 trillion in 2024 to $1.6 trillion by 2029, driven by increasing waste volumes and improved collection methods in emerging markets. The industry is benefiting from rising ESG awareness, technological advancements like AI-powered waste sorting, and innovations in Waste-to-Energy technologies, which are expected to see a CAGR of 6.8% reaching $93 billion by 2034. Despite increasing operating costs, H2O America (HTO), Republic Services (RSG), and Montrose Environmental Group (MEG) are identified as promising stocks, with RSG and MEG showing significant year-to-date gains of 27% and 10.4%, respectively.

Analysis

The global waste management sector is poised for significant expansion, projected to grow from $1.2 trillion in 2024 to $1.6 trillion by 2029, driven by increasing waste volumes and enhanced collection methods, particularly in emerging markets. Key secular tailwinds include heightened focus on Environmental, Social, and Governance (ESG) principles, where the industry averages a 50-60% disclosure score per Grand View Research, and the adoption of advanced technologies such as AI for waste sorting. The Waste-to-Energy (WTE) sub-segment is also set for robust growth, with its market size anticipated to expand from $48.1 billion in 2024 to $93 billion by 2034, reflecting a 6.8% CAGR according to Precedence Research. Despite these positive trends, the industry faces challenges from rising operating costs. Notably, the Zacks Waste Removal Services industry has outperformed its broader sector and the S&P 500 over the past year with a 14.6% rally, compared to 9.5% and 12.8% respectively, and currently trades at an EV/EBITDA multiple of 13.63X, near its five-year median of 13.35X. While the Zacks Industry Rank for Waste Removal Services is #152 (bottom 38%), the article states this rank indicates continued outperformance in the near term. Specific companies show promise: H2O America (HTO), with a Zacks Rank #2 (Buy), invested $78 million in Q1 2025 infrastructure as part of a $2 billion 5-year plan and has seen its 2025 earnings consensus improve slightly. Republic Services (RSG), holding a Zacks Rank #3 (Hold), is expanding its EV fleet with 52 electric vehicles added in 2024 and has experienced a 27% year-to-date share appreciation. Montrose Environmental Group (MEG), also a Zacks Rank #3 (Hold), reported a 14.5% year-over-year revenue increase in Q1 2025, fueled by organic growth and acquisitions, and saw its 2025 consensus earnings estimate rise by over 100% in the past 30 days, with shares up 10.4% year-to-date.

Key Decisions for Investors

• Investors should consider the waste management sector's strong growth trajectory, projected to reach $1.6 trillion by 2029, supported by ESG tailwinds and technological advancements like Waste-to-Energy, which itself is forecast for a 6.8% CAGR.
• It is prudent to evaluate companies within the sector that demonstrate robust strategies for technological integration, such as AI in waste sorting or WTE innovations, and effective operational cost management to sustain margins.
• Further due diligence is warranted for H2O America (HTO), given its infrastructure investments and 'Buy' rating; Republic Services (RSG), for its scale, EV transition efforts, and 27% YTD stock gain; and Montrose Environmental Group (MEG), due to its 14.5% Q1 revenue growth and a significant upward revision in its 2025 earnings consensus.
• Closely monitor the industry's ability to mitigate rising operating costs and how effectively individual companies convert investments in technology and ESG compliance into sustained profitability and shareholder value.