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The Beauty Behind 'Boring' Stocks During Market Volatility
Key Takeaways
Volatility has shown its face as of late, with tech stocks facing major pressure.
RSG and CTAS are compelling options for those seeking companies with a predictable nature.
Both stocks are up more than 15% over the last month, also outperforming the S&P 500 over the last 5 years.
As we all know, market volatility has picked up significantly, with technology stocks facing particularly notable selling pressure as investors reassess valuations and the broader AI spending outlook.
Technology remains attractive thanks to its strong growth prospects, with the AI revolution providing a powerful tailwind. That said, the recent pressure has also highlighted the benefits of owning simpler businesses that may be less exciting than the high-flying tech stocks.
For example, Republic Services (RSG - Free Report) and Cintas (CTAS - Free Report) are two stocks worth a closer look, both operating relatively straightforward businesses, with recurring demand for their services providing nice visibility.
Republic Services Remains Steady
Republic Services is a leading provider of waste collection, recycling, and disposal services, serving residential, commercial, and industrial customers throughout North America.
Regardless of the economic environment, households and businesses still need their trash collected, providing a consistent demand backdrop that investors can reliably count on.
RSG's latest quarterly results remained positive, with revenue up 8.2% YoY and adjusted earnings up 2% YoY. The stock also reflects a solid option for those with an appetite for income, currently sporting a 7.5% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
Shares have gained more than 15% over the last month, showing strong outperformance against the broader market. Consistent earnings growth over the years has also led to longer-term outperformance against the broader market, with shares up 86% over the last five years compared to the S&P 500’s 67% gain.
Image Source: Zacks Investment Research
Cintas Shares Double
Cintas provides uniform rental, facility services, and workplace safety products to businesses, including everything from uniforms and floor mats to restroom supplies and first-aid services.
Like RSG, the company's services are essential to its customers, and recurring demand provides solid predictability. Simply put, businesses still need basic supplies regardless of the latest market developments.
Growth has remained solid, with its latest quarterly release showing 10.9% YoY revenue growth to $3.0 billion. Operating income also climbed 15.2%, with management raising its current fiscal year outlook following the favorable results.
Image Source: Zacks Investment Research
The results show that ‘boring’ doesn't always mean slow growth, with CTAS continuing to deliver a strong level of operational performance. The stock has gained nearly 17% over the past month, showing a high level of relative strength. Like RSG, the stock has similarly outperformed the broader market over the last five years, gaining nearly 110%.
Image Source: Zacks Investment Research
Bottom Line
While tech undoubtedly remains attractive given its long-term growth prospects, simpler businesses like Republic Services (RSG - Free Report) and Cintas (CTAS - Free Report) shouldn’t be overlooked thanks to their recurring demand and relatively predictable operations.
View the Zacks #1 Rank List
Image: Bigstock
The Beauty Behind 'Boring' Stocks During Market Volatility
Key Takeaways
As we all know, market volatility has picked up significantly, with technology stocks facing particularly notable selling pressure as investors reassess valuations and the broader AI spending outlook.
Technology remains attractive thanks to its strong growth prospects, with the AI revolution providing a powerful tailwind. That said, the recent pressure has also highlighted the benefits of owning simpler businesses that may be less exciting than the high-flying tech stocks.
For example, Republic Services (RSG - Free Report) and Cintas (CTAS - Free Report) are two stocks worth a closer look, both operating relatively straightforward businesses, with recurring demand for their services providing nice visibility.
Republic Services Remains Steady
Republic Services is a leading provider of waste collection, recycling, and disposal services, serving residential, commercial, and industrial customers throughout North America.
Regardless of the economic environment, households and businesses still need their trash collected, providing a consistent demand backdrop that investors can reliably count on.
RSG's latest quarterly results remained positive, with revenue up 8.2% YoY and adjusted earnings up 2% YoY. The stock also reflects a solid option for those with an appetite for income, currently sporting a 7.5% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
Shares have gained more than 15% over the last month, showing strong outperformance against the broader market. Consistent earnings growth over the years has also led to longer-term outperformance against the broader market, with shares up 86% over the last five years compared to the S&P 500’s 67% gain.
Image Source: Zacks Investment Research
Cintas Shares Double
Cintas provides uniform rental, facility services, and workplace safety products to businesses, including everything from uniforms and floor mats to restroom supplies and first-aid services.
Like RSG, the company's services are essential to its customers, and recurring demand provides solid predictability. Simply put, businesses still need basic supplies regardless of the latest market developments.
Growth has remained solid, with its latest quarterly release showing 10.9% YoY revenue growth to $3.0 billion. Operating income also climbed 15.2%, with management raising its current fiscal year outlook following the favorable results.
Image Source: Zacks Investment Research
The results show that ‘boring’ doesn't always mean slow growth, with CTAS continuing to deliver a strong level of operational performance. The stock has gained nearly 17% over the past month, showing a high level of relative strength. Like RSG, the stock has similarly outperformed the broader market over the last five years, gaining nearly 110%.
Image Source: Zacks Investment Research
Bottom Line
While tech undoubtedly remains attractive given its long-term growth prospects, simpler businesses like Republic Services (RSG - Free Report) and Cintas (CTAS - Free Report) shouldn’t be overlooked thanks to their recurring demand and relatively predictable operations.