Add Waste Management (WMI) to the Evergreen Portfolio

Well, the time has come...

I've waited until almost the last minute to reveal the "Dirtiest Green Stock in America."

It certainly wouldn't be the first company you might think of mentioning to your Green Party friends at the next cocktail party. But perhaps it should be.

Not only is this company America's #1 recycler on a volume basis... It's at the very forefront of the battle against pollution and for a cleaner environment. It is, in a nutshell, the biggest trash-disposal company in the country.

21 Million Customers... and Growing

Headquartered in Houston, the company's network of operations includes 413 collection operations, 370 transfer stations, 283 active landfill disposal sites, 17 waste-to-energy plants, 131 recycling plants, 95 beneficial-use landfill gas projects and 6 independent power production plants.

The company provides collection services to 21 million customers, including individual homes, municipalities and commercial sites.

But it also happens to be the most aggressively green waste-management company on the planet.

And that's why we're adding Waste Management Inc. (NYSE: WMI) to the Evergreen Portfolio today...

WMI's Been "In Training"... And It's Ready for a Title Run

This $20 billion behemoth is rated a four-star "buy" by Standard & Poor's... and for good reason.

WMI has it been buying back shares to the tune of more than $1 billion annually (starting in 2006 and continuing into this year)... It's in a non-cyclical business with high cash flow. But here's why the stock could be prepared to take off...

Over the past two years, WMI has quietly been divesting itself of underperforming assets, paring back losing operations and getting the company's massive operations into fighting shape.

It currently plans on divesting some $900 million dollars worth of annual revenue producers... In 2006 alone, it dumped $325 million worth of going-nowhere enterprises off the books. So far this year it has cut another $230 million in underperforming assets.

Such waste-trimming doesn't do a lot to make you sexy to shareholders when it's happening...

But now is about the time when we can expect this efficiency increase to start paying dividends.

As stated in the S&P report:

"We think the company will benefit from its intention to simplify its organizational structure by placing more emphasis on the day-to-day decision making at its regional operations, and by reducing costs at its group and corporate offices."

And that brings me to another point: WMI is yielding 2.49% as I write, which betters the S&P 500's average dividend of 1.9%.

Overall, this stock should provide a nice, stabilizing influence on our portfolio.

Now... for the Green Part

WMI has long prided itself on earth-friendly, effiency-oriented initiatives. And indeed, this company is the perfect example of the idea that greener business means smarter organization... more efficiency... and bigger gains.

Just a few examples...

• WMI recovers and processes methane gas, which is naturally fermented from landfills, and sells it to power plants to produce energy. Right now the company supplies enough landfill gas to generate 250 megawatts of energy each year... enough to power 225,000 homes or replace about 2 million barrels of oil (www.wm.com/wm/about/overview.asp).
• It has converted 495 of its vehicles from diesel into natural gas and has one of the country's largest natural-gas-powered heavy-truck fleets.
• WMI helped found the Chicago Climate Exchange, which is fast becoming the leading exchange for carbon trading (offsets), favored by the likes of Al Gore, the Nobel Prize Winner (tee-hee!).

Not only that, the company just announced a major new green push that includes:

Increasing waste-based energy production. Today, Waste Management creates enough energy for the equivalent of 1 million homes each year. By 2020 it expects to double that output, producing enough energy for the equivalent of more than 2 million homes.

Increasing the volume of recyclable materials managed. Waste Management currently manages 8 million tons of recyclables; by 2020 it plans to capture enough of the increasing volumes to manage more than 20 million tons.

Directing its capital spending of up to $500 million per annum over a 10-year period to increase the fuel efficiency of its fleet by 15 percent and reduce fleet emissions by 15 percent by 2020. The company also expects to invest in technologies to enhance its waste business.

Preserving and restore wildlife habitat across North America. By 2020, Waste Management plans to increase by more than four times the number of facilities – from 24 to 100 – certified by the Wildlife Habitat Council, and increase the number of acres set aside for conservation and wildlife habitat to approximately 25,000.

(Source: www.wm.com)

For all these reasons, and more, we like WMI right now.

Action: Add Waste Management Inc. (NYSE: WMI) to the Evergreen Portfolio at $38.11. Use a 25% trailing stop to protect your principal and profits here.

Good investing,

James