It can be a difficult time to invest these days with valuations being sky high for many stocks. We’ve seen cannabis stocks listed on the TSX double in less than a year. There are tech stocks south of the border that are trading more than 200 times their earnings.
Although it may be tempting to jump aboard these bandwagons, it can be very risky to do so as there is a very real possibility that some significant market corrections could be coming our way. Perhaps it is a pessimistic viewpoint of where we are, but when you consider we are seeing headlines of the TSX and NYSE reaching record highs while at the same time interest rates are rising, we could be on a collision course for a big reality check.
One way to protect yourself from these risks is to ensure that you have investments that are recession proof and will be able to continue to grow sales when times are tough.
Waste Connections Inc (TSX:WCN)(NYSE:WCN) fits that mold perfectly as the company is in acquisition mode and is in an industry that is as recession proof as it gets. Whether people have disposable income or not, they will have trash. In a fragmented market with strong financials, Waste Connections has positioned itself to take advantage of industry conditions and acquire its way to a stronger top line.
Although the company may have a high valuation with a price to earnings ratio of 46, Waste Connections has proven to be a strong investment with sales growth of 11% in its most recent quarter and profits rising by more than 38% year-over-year. If the company can continue these strong results then it is inevitable that it will trade at a smaller multiple of earnings.
