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Waste Management Hits 52-Week High on Solid Growth Dynamics

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Shares of Waste Management, Inc. (WM - Free Report) scaled a new 52-week high of $84.57 during Friday’s trading session for a healthy year-to-date return of 19.9%. Barring minor hiccups, Waste Management’s share price has steadily been on an uptrend since mid-May. This Zacks Rank #3 (Hold) stock has the potential for further price appreciation with long-term earnings growth expectation of 9.6%.

Growth Drivers

Waste Management is successfully executing its initiatives to refocus on core business activities and instill price and cost discipline to achieve better margins. At the same time, the company aims to improve customer retention by providing better service and higher value solutions. Waste Management's successful cost-reduction initiatives have further helped it achieve remarkable gross margin expansion and EBITDA (earnings before interest, tax, depreciation and amortization) growth over the quarters.

In addition, Waste Management plans to return significant cash to shareholders through healthy dividends and share repurchases in the future. A steady dividend payment policy is part of its long-term strategy of providing attractive risk-adjusted returns to its stockholders. The company’s investment strategy takes a holistic view of the rapidly evolving market and deploys a dynamic capital allocation approach to execute its growth strategy. Furthermore, decent dividend increases at periodic intervals have been one of the company’s most attractive features.

With strong yield, volume and cost performance in the third quarter, the company has raised its guidance for 2017. It expects 2017 adjusted earnings in the range of $3.19 to $3.21 per share compared with earlier expectations of $3.14 to $3.18. Free cash flow is expected between $1.7 billion and $1.8 billion, up from previous expectations of $1.5 billion to $1.6 billion. Such a bullish outlook raises investor confidence in the stock.

All these measures and solid inherent growth potential probably raised investor confidence and drove its shares to a new 52-week high.

Stocks to Consider

Better-ranked stocks in the industry include S&P Global, Inc. (SPGI - Free Report) , TransUnion (TRU - Free Report) and Accenture plc (ACN - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

S&P Global has a solid long-term earnings growth expectation of 12.5%. It topped estimates in each of the trailing four quarters with an average positive earnings surprise of 11.1%.

TransUnion has a healthy long-term earnings growth expectation of 10%.

Accenture has a solid long-term earnings growth expectation of 10.3%. It topped estimates in each of the trailing four quarters with an average positive earnings surprise of 2.6%.

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