Defensive companies offer essential products and services, resulting in a steady demand, regardless of broader market conditions. As a result, these companies tend to deliver stable financial performance and reliable returns. Let’s investigate this in mind Waste connections (TSX: WCN) and Dollarama (TSX: Dol) to determine which of these two could be the better defensive investment.
Waste connections
Waste connections are busy collecting, transferring and throwing away non-hazardously solid waste. It is active in exclusive and secondary markets of the United States and Canada, which confronts less competition and enjoys higher margins. The integrated company for fixed waste management has expanded its company through both organic growth and an aggressive acquisition strategy. Since 2020, the company has spent more than $ 6.5 billion to complete more than 110 acquisitions. These growth fees have increased its financial data and share price. It has achieved more than 465% return in the last 10 years, with an annual rate of 18.9%. In the midst of these solid returns, the company is currently being traded on NTM (next-12 months) price-to-sales multiple and NTM price-to-win multiples at 4.9 and 34.8 respectively.
In addition, WCN is building 12 renewable natural gas facilities, which can become operational next year. These facilities together can contribute $ 200 million to its EBITDA (profit for interest, taxes, depreciation and amortization) per year as soon as they become operational. Furthermore, the management of the company has adopted technological progress, such as robotics and optical sorters, to improve operational efficiency. Furthermore, the AI (artificial intelligence) based e-learning modules and AI-driven, camera-based telematics in its fleet has taken over to improve the safety of employees. Together with these security measures for employees, the improved employee involvement has reduced the voluntary turnover and open positions, stimulating the operational margins.
WCN also continues with its acquisitions and has so far acquired different assets year that can contribute to the top line every year around $ 200 million. Given the solid financial position, healthy cash flows and a robust acquisition pipeline, the management of the company expects to continue to continue with its acquisitions, where management expects to witness this year of surplus acquisition activities. Given all these factors, I believe that the growth prospects of WCN look healthy.
Dollarama
Dollarama is a Canadian discount retailer that operates 1,638 stores in Canada. Supported by its superior direct-sourcing model, buying options and efficient logistics, the company can deliver compelling value to its customers, so that a healthy sale is enjoyed in the same store, regardless of the broader market conditions.
Furthermore, the discount retailer established in Montreal has counted its stores from 652 in tax 2011 to 1,638 from the end of the Tax 2026. These extensions have, together with the healthy turnover in the same store, the annual growth rate of the same stores, while its Ebinda growth rate has been grown. 33%. These solid financial services have driven its share price higher, with the company yielding more than 670% returns with an annual rate of 22.7% in the last 10 years. In the meantime, Dollarama is currently being traded on NTM Price-to-Sales and NTM price-to-win multiples of 7.7 and 41.2 respectively.
Moreover, Dollarama continues to grow its shopping network and expects the number of stores to reach 2,100 by the end of the tax 2034. Given the cost-effective, growth-oriented business model, lean operations and lower payment period, these extensions can support both the upper and the bottom lines. In addition, the company recently arrived the Australian retail market by gaining the rejection, which operates 390 discount shops throughout the country.
Furthermore, Dollarama has a 60.1% interest in Dollarcity, which operates 644 stores in Latin -America. In the meantime, DollarCity is expanding its footprint and expects to reach a shop of 1,050 by the end of the tax 2031. Furthermore, Dollarama can increase its interest in dollalcity to 70% by exercising its option at the end of the tax 2027. Given this growth initiatives, I think of the uptrend in dollaramas and the matters that continue.
Investors’ pick -up restaurant
Supported by their solid financial data, both companies have rewarded their shareholders a healthy return in the last 10 years. In the meantime, I believe that the WCN would be a better defensive bet because of the essential nature of his company and relatively cheaper appreciation.
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