The Tortoise Is Gaining Ground

Research evidence excerpt

The Tortoise Is Gaining Ground

TD SECURITIES (USA) LLC INDUSTRY UPDATE

July 21, 2026

■Environmental Services: Waste The Tortoise Is Gaining Ground

Management

James Schumm THE TD COWEN INSIGHT

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Waste stocks are beginning to show long overdue outperformance as AI/tech stumbles. Waste

james.schumm@tdsecurities.com

profit and margins continue to grind higher while valuations are attractive. We recommend

investors take advantage of beaten-up stocks GFL and CWST as investor concerns appear

misplaced and overblown. Additionally, we think GFL and CLH could beat and raise though

this is already likely priced into CLH shares.

After a rough 12 months (down 7% vs. SPX up 19%), solid waste stocks (the tortoise) have

gained ground on the hare (QQQ) over the past month (+11% vs -6%). The chart below shows

an almost perfect mirror image of the solid waste index to technology stocks (QQQ) as

investors eschew waste in favor of high-growth AI and tech stocks. This trade looked a lot

more attractive last year with waste valuations near all-time highs and commodity prices

dropping precipitously, but now waste valuations are very attractive with most commodity

prices rebounding substantially. Pricing remains strong with low churn and tame cost inflation

paving the way for continued margin improvement.

2Q earnings season kicks off with Waste Connections on Wednesday, July 22 (AMC). We

are lowering our 2Q and 2026 EBITDA estimates 1% to reflect more conservatism and to

bring us more in line with consensus. All other waste estimates are unchanged as continued

soft construction volumes are generally accounted for or offset by some combination of

conservative guidance, bolt-on M&A and improving commodity prices. While Q2 OCC prices