(This is “The Best Stocks in the Market,” brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — Bill Gates was doing HALO before it was cool. He owns about 28.9 million shares, or about 7%, of Waste Management (WM) through the Bill & Melinda Gates Foundation Trust. This will make the Trust the single largest individual shareholder and one of the top holders overall. Microsoft is a $3 trillion global software platform tied to enterprise spending and capital investment in AI. Waste management is almost at the other end of the spectrum. It is a collection and landfill operator with contract revenues, a built-in price escalator, and assets that cannot be replicated because it does not allow new landfills in the United States. Waste Management generates more than $20 billion in annual revenue, more than $5 billion in EBITDA, and approximately $2 billion in free cash flow. We have continued to increase dividends for over 20 years. Gates didn’t spend the past two decades hedging his technology exposure with other growth stocks. He combined Microsoft’s traditional position with a high-asset, low-obsolescence compounding company that burns cash in any environment. The company has spent a lot of money modernizing its equipment and building automation. This is the year when the investment cycle finally pays off. Sean talks to me and I go back to setting up. Best Stock Spotlight: Waste Management, Inc. (WM) Sean — The story I’m about to tell, of course, has already been factored in. But it’s still an interesting story, and you can feel a little more comfortable pulling the buy trigger on stocks that are within 5% of their 52-week high. The market is very focused on capital expenditures (Capex), and Waste Management has a unique capex story to tell. WM essentially went through a multi-year reinvestment cycle, intentionally sacrificing free cash flow to build new, higher-margin businesses. Their management described this as “planting years,” which refers to when farmers plant crops. WM has committed approximately $11.6 billion in “planted” capital from fiscal years 2022 to 2025. Our largest investment to date was the $7.5 billion acquisition of Stericycle, which created our Healthcare Solutions division. The division focuses on the collection, processing and disposal of medical waste and generated $2 billion in revenue and a 16% profit margin in its first full year under WM’s ownership. On the organic side, approximately $1.8 billion was spent on infrastructure, including seven landfill gas power plants that currently produce pipeline-quality natural gas, and $1.2 billion was spent modernizing the recycling network using robotics and AI across nine recycling facilities. WM also implemented a truck purchase program to accelerate its transition to autonomous sideloader trucks, with above-average vehicle spending of $420 million, plus an additional $800 million in technology and bolt-on acquisitions in 2024 alone. Well, all of that “planting” is starting to pay off. As you can see from the graph above, these investments have a direct impact on cash flow, and once the capex spigot is turned off, free cash starts flowing. WM’s management is calling 2026 the “year of harvest.” Below are some recent words. CEO Jim Fish at the Goldman Industrials and Materials Conference in December: “I think certainly in 2026, what we’ll do is recover a lot of cash from these and return them to our shareholders. $3 billion in both the RNG business and the recycling business is a significant investment,” the company’s chief financial officer, David Reid, said in a January earnings call. “As we indicated in the last quarter and in our announcement regarding some of our shareholder returns in December, we believe 2026 will be a year of harvest and a balanced capital allocation program.” All of these projects are generating revenue rather than consuming capital. Capital expenditures decreased from $950 million in fiscal year 2024 to $200 million in fiscal year 2026. WM expects FCF growth to be 29% year-over-year at the midpoint, which would be the largest FCF growth since COVID-19. Coupled with more efficient operations and new revenue streams, WM and its shareholders are poised to cash in just in time for HALO to revalue its earnings. Risk Management Josh — I like this. Because now you have a proof point. We will pay attention to how the stock behaves as it quietly declines to this rising 50-day moving average. I expect a bit of consolidation to occur before the 200-day starts trending up. WM is not going to run away from us. Waste Management has cut off November’s lows, regaining both the 50-day and 200-day, and catapulted back to previous highs in the $238-$240 area. Since then, prices have tightened just below resistance in a shallow consolidation. It is controlled, occurring above the rising moving average, and shows no signs of mass distribution. Old highs are back. A decisive push up from $238 to $240 will put the stock into ceiling territory. Risks are clear and defined. A failure below 200 days around the 222nd would invalidate the setup and suggest that the breakout attempt will take more time. Until proven otherwise, this is constructive digestion under resistance, not distribution. A trader may want to take a half position here and double on the breakout to $240. Disclosure: (none) All opinions expressed by CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, its parent or affiliates, and may have been previously disseminated on television, radio, the Internet, or another medium. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any securities or other financial assets. The content is general in nature and does not reflect your unique personal circumstances. The above may not be appropriate for your particular situation. 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