Why Waste Management Stock Is a Top Defensive Play Now

Key Points

• After a couple of volatile weeks in the stock market, it has become clear to investors that the market now prefers safe stocks.
• In that space, Waste Management shares have been calling for more institutional capital and attention lately.
• Double-digit upside with very little volatility awaits investors in this company, not to miss during today's volatile market.

Investors shouldn’t be surprised to see the recent market interest going into defensive areas, especially as call option interest has grown in areas like consumer staples. This theme can be spotted through the Consumer Staples Select Sector SPDR Fund NYSEARCA: XLP. However, not all staple names are treated equally in this market.

Today, there is one opportunity for investors to add momentum and limited volatility to their portfolios by looking into the recent price action in shares of Waste Management Inc. NYSE: WM. This company is as defensive as it comes, as it deals with scrap and waste generated from everyday activities in the United States economy. Knowing this, it probably doesn’t matter whether the economy is booming or busting; this company is set to do well.

This is exactly why the stock has outperformed the broader S&P 500 over the past month, and this theme will likely continue. Other factors at play make this stock a great addition to any portfolio, such as current institutional and market interest in the company amid all this volatility.

What’s Driving Capital Into Waste Management Stock?

Over the past couple of weeks, a couple of events have awakened volatility in the market. First, there was the DeepSeek debacle with NVIDIA Co. NASDAQ: NVDA and the rest of the technology sector. Then, there is the ongoing concern of President Trump announcing the latest round of trade tariffs.

With this uncertainty and shocks to the S&P 500 price action, professional and retail investors alike have looked to safety in names like Waste Management. This is why the stock left the S&P 500 behind by as much as 9% over the past month alone, but the bullish evidence doesn’t stop there.

As of February 2025, those at Charles Schwab Investment Management decided to boost their holdings in Waste Management stock by 3.1%. While this may not sound like much on a percentage basis, it did bring the group’s net position to a high of $434.3 million today, but even that is not only half the picture for this company’s bright future.

Despite the recent stock market shocks, which brought large and sharp down moves, Waste Management stock has managed to still trade within 5% of its 52-week high, giving investors the low volatility they need in their portfolios during times like these.

This stability in fundamentals and price action is also where Wall Street analysts live and thrive, making them more comfortable pushing for a more optimistic rating and price target for the company. Investors can see this theme at play through the recent buy ratings from Citigroup analysts, as recently as February 2025.

Not only did these analysts reiterate their ratings for Waste Management stock, but they also raised their price targets on it to $255 a share from their previous $242 valuation. This new view not only calls for a new 52-week high in the stock but also for a net upside of as much as 13% from where it trades today, not usual for a bit and slow company like this one.

The Market’s Bullish Take on Waste Management Stock

Apart from rewarding this name with bullish price action in recent weeks, there are also other signs investors should be aware of regarding how the market’s sentiment revolves around an individual stock. This is done through valuation multiples. Here’s the clear sign investors need to be aware of.

By trading at a price-to-book (P/B) ratio of 13.1x today, Waste Management stock calls for a steep premium compared to the refuse systems industry’s 4.1x average valuation. Now, some value investors might call this an expensive stock that is borderline bloated. Still, seasoned professionals will remind them of one simple truth.

That is the market will always pay a premium for the companies it expects to outperform its peers and the rest of the market. As evidenced by the past month’s price action, that expectation has turned out to pay these buyers very well regarding Waste Management stock.

Ultimately, earnings per share (EPS) tend to drive a stock’s valuation, so investors can feel safe in the fact that Wall Street analysts now forecast up to 20% in EPS growth for the next 12 months. This means today’s valuations from Citigroup might be conservative after all.