Waste Management (WM) Fell Behind the Rally. Is It an Opportunity?

Parnassus Investments, an investment management firm, shared insights from its Parnassus Core Equity Fund's second quarter 2026 investor letter. The fund managed to outperform the S&P 500, which gained 15.20% in the same period, with a return of 16.83%. This performance was driven by investments in Information Technology, Communication Services, and the fund's avoidance of the Energy sector, while Financials and Healthcare sectors had a negative impact.

The fund is focused on long-term growth through AI infrastructure, semiconductors, electrification, and industrial automation, while maintaining a defensive stance with quality compounders. Moving forward, Parnassus remains optimistic about U.S. equities but cautious about market leadership, trade tensions, inflation, and geopolitical risks.

The company continues to invest in high-quality, competitively advantaged businesses at attractive valuations, balancing the potential of AI-driven opportunities with risk management. In its latest investor letter, Parnassus highlighted Waste Management, Inc. (NYSE:WM) among its top holdings. Waste Management is the largest provider of waste collection, recycling, and environmental services in North America.

The company's shares have fluctuated between $194.11 and $248.13 over the past 52 weeks, with a market capitalization of approximately $89.62 billion. As of August 13, 2026, Waste Management's stock closed at around $226.32 per share. However, the fund noted that Waste Management's stock declined following the company's mixed first-quarter financial results, with earnings exceeding expectations but revenue falling short.

The defensive stock also did not fully capitalize on the broader market rally. Parnassus remains confident in Waste Management's long-term growth potential due to its strong competitive advantage and dominant market position in landfill ownership. The investment firm does not consider Waste Management as one of its 40 Most Popular Stocks Among Hedge Funds Heading Into 2026.

In Q1 2026, 61 hedge fund portfolios held Waste Management, while 65 held it in the previous quarter. Despite acknowledging the risks associated with Waste Management, Parnassus believes that other AI stocks may offer greater returns in a shorter timeframe. If an extremely undervalued AI stock with potential benefits from Trump-era tariffs and the onshoring trend is desired, Parnassus recommends checking their free report on the best short-term AI stock.

The article also mentions another Waste Management, Inc. (NYSE:WM) article, which provides a list of the best long-term stocks according to the Bill & Melinda Gates Foundation Trust.