The Misfits: Advanced Drainage Systems (WMS)

Think all the great returns are in AI? this septic tank company may make you think otherwise.

An Old Cistern, Jacques Joseph Tissot, ink and graphite on paperboard, between 1886 and 1889 (Brooklyn Museum)

A 1,100% return in 10 years or less is typically reserved for hot tech companies, trendy retail or restaurants, or some other consumer-facing product that catches lightning in a bottle.

But septic tanks? Really? How the heck do septic tanks generate a 28% annualized return for a decade? Advanced Drainage Systems’ (NYSE: WMS) meteoric rise since its IPO in 2014 is nothing short of spectacular.

A septic tank company running laps around the broader markets is the kind of stock Peter Lynch imagines on an ayahuasca walkabout through Joshua Tree. It barely seems believable. Sure, it's a good business, but is it a better performer than five of the Magnificent Seven over the past 10 years?

Not pictured, NVIDIA’s 30,000% return…

It’s been almost exactly 10 years since Advanced Drainage Systems went public. Ten years isn’t that long in market terms. So, let’s unpack what allowed Advanced Drainage Systems to post these monster returns, whether they are replicable, and any other lessons along the way.

---

Shoutout to Koyfin for their data and charts. Koyfin has become an integral part of how I screen for, track, and analyze companies. It has made the analysis process much faster thanks to having a decade of data at my fingertips instead of manually going through stacks of quarterly and annual filings.

Up your analysis process by Signing up for Koyfin. Click on the link below and receive 10% off your annual subscription.

Disclaimer: I have an affiliate partnership with Koyfin and receive compensation if you sign up via the link above. It helps me fund this endeavor. I would still recommend using it even if I didn’t have this partnership because it’s an awesome product, but I’d be stupid to turn down a revenue opportunity. You get a discount, Koyfin gets new business, and I get a commission. Win-win-win).