There are no safe havens in the stock market. Every stock carries risk. But some less than others. This column features stocks that have shown one or more of the following characteristics: less volatility, better earnings, larger market caps, safe and increasing dividends. In these times of turmoil, our goal is to show readers better opportunities for investing with fewer risks.

June 9, 2009 - Waste Management, Inc. (WMI-NYSE) provides integrated waste management services in North America. The company offers collection, transfer, recycling, disposal, and waste-to-energy services. Its recycling operations include collection and materials processing, plastics and rubber materials recycling, electronics recycling services, and commodities recycling.

The company offers portable self-storage, fluorescent lamp recycling services, and healthcare solutions services, as well as provides services on behalf of third parties for construct waste facilities. It serves commercial, industrial, municipal, and residential customers, as well as other waste management companies, electric utilities, and governmental entities.

Waste Management, Inc. has a joint venture with InEnTec, LLC to develop, operate, and market plasma gasification facilities using InEnTec's Plasma Enhanced Melter technology. The company was formerly known as USA Waste Services, Inc. and changed its name to Waste Management, Inc. in 1998. Waste Management, Inc. was founded in 1894 and is based in Houston, Texas.

This stock carries a good yield (over 4%) that is well covered, has a strong balance sheet with almost a billion dollars in cash, and offers a service that is needed. While earnings will most likely be lower this year, management is working on ways to cut costs and increase them again in 2010.

Those earnings are projected to be $2.01 this year, below the $2.22 of 2008. In 2006, they were $1.82, then went to $2.07 in 2007. The reason for the lower income level: prices for used paper and cardboard have been decreasing since the latter part of 2008, and accelerated in the early part of this year. The company is stuck with fixed contracts with municipalities for recycling paper but will renegotiate those to more favorable terms upon expiration. Part of the new contracts will include higher processing fees and elimination of minimum pricing Waste Management has to pay.

June quarter earnings are predicted to be lower, coming in at 54 cents a share vs 63 cents in the same quarter last year. The September quarter is projected to be 56 cents compared to 63 cents last year in the same period.

On the positive side, WM has been able to raise prices for many of its services as competition is not as intense. While volumes have decreased, part of that loss has been covered by higher prices. In the March quarter, the company showed core pricing at its collection and disposal businesses up, year over year, by 3.9% and 1.7% respectively. Volumes were down by 7.4% and 11.5%. Commercial customers are seeing the highest price increases, but the rate of increase has been slowing for the last 2 years. Analysts expect more moderation this year and in 2010.

Management is going after costs. It eliminated many SG&A expenses (selling, general and administrative) by consolidating regional offices (taking them from 45 to 25). There was an 11 cents, one-time restructuring charge for the consolidation. Management estimates pretax savings of $120 million a year from this action. Other costs going down: fleet maintenance. Also helping lower costs: better driver safety programs.

More numbers: Market Cap is $13.8 billion. Forward P/E is 12.73. Price to Book is 2.36. Operating margin for the last 12 months was 16.73% while Profit margin was 7.74%. Cash per share is $1.93. Total debt is $8.8 billion. Current ratio is 1.046. Book Value per share is $12.00. Beta is .51. The 52-week high was $39.25 on June 19, 2008. The 52-week low was $22.10 on March 9, 2009. There are 492 million shares outstanding with a float of 451.41 million. Insiders own 6.8%. Institutions have 83.6% of the stock. The dividend is $1.16 for a yield of 4.1%. The payout ratio is 54%.

This stock took a dip in the early part of this year, hitting $22 but has rallied back to $28. While earnings will be lower this year, the future looks good with pricing power favoring the company. This is a solid stock with a good dividend and notable return on equity. It has a history of buying other firms and with almost a billion in cash could easily add more.

Company Web site: www.wm.com

- Ted Allrich