A prudent investment decision involves buying stocks that have solid prospects and selling those that carry risks. At times, it is rational to hold certain stocks that have enough potential but are weighed down by tough market conditions.
We believe that Rollins, Inc. (ROL - Free Report) with Growth Score of B and a market cap of $12.1 billion, is a stock that investors should retain in their portfolio.
Shares of the company have gained 10.3% over the past year, outperforming the 6.1% rally of the industry it belongs to.
Factors That Bode Well
The factors that drive growth for this pest and termite control services provider, including steady economic growth, rising corporate and consumer spending and decent construction activity in residential and non-residential sectors, are expected to remain in place through 2019.
A balanced approach to organic and inorganic growth should continue to keep Rollin’s revenues in good shape. Strong technician and customer retention driven by enhanced benefits are expected to drive organic growth. The 2018 Northwest Pest Control acquisition has started making significant contributions to Rollin’s revenues.
Rollins is in excellent financial health, with plenty of ongoing cash generation and no debt.
Rollins, Inc. Revenue (TTM)
Despite riding on significant growth prospects, Rollins is not free from overhangs. The company is witnessing escalation in costs resulting from acquisitions, lease expenses, IT and advertising. Moreover, its policy of acquiring a large number of companies could result in some integration risks. Nevertheless, we believe that favorable growth dynamics and a strong financial profile bode well for Rollins.
Zacks Rank & Stocks to Consider
Currently, Rollins is a Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A few top-ranked stocks in the broader Zacks Business Services sector are Navigant Consulting (NCI - Free Report) , WEX (WEX - Free Report) and FLEETCOR Technologies (FLT - Free Report) . While Navigant Consulting sports a Zacks Rank #1, WEX and FLEETCOR carry a Zacks Rank #2 (Buy).
Long-term expected EPS (three to five years) growth rate for Navigant Consulting, WEX and FLEETCOR is 13.5%, 15% and 16%, respectively.
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