Services Sector Ideas

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Cintas - >>> 3 Top Stocks to Buy During a Sell-Off


Motley Fool

By Reuben Gregg Brewer -

Mar 17, 2022


https://www.fool.com/investing/2022/03/17/3-top-stocks-to-buy-during-a-sell-off/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


3. Cintas: Uniform performance

Cintas ( CTAS 1.50% ) is the last name on this list. The company focuses on renting uniforms. While that sounds kind of boring, the company has been anything but for investors. Even after a 20% pullback from its recent highs, the stock is still up more than 800% over the past decade.

While you can argue that Cintas is already in a bear market because of that, the 1% dividend yield is still on the lower side of its recent historical range. A yield closer to 1.5% would be much more attractive and could come about in a broader market pullback.

To be fair, Cintas is economically sensitive, given that its customers tend to need fewer uniforms during recessionary periods. But the long-term trend here is for growth, often via acquisition. And a downturn would make it that much easier to find good bolt-on deals. Indeed, with leverage back down after 2017's purchase of G&K Services, Cintas looks like it's ready for another sizable purchase.

So a broader market downturn, perhaps initiated by a recession, might actually be a good thing for Cintas' business. And if you prepare ahead of time, you can take the opportunity to buy at lower prices, confident that management will continue to find new avenues for long-term growth.

Some added confidence here should come from the company's nearly four decades'-long streak of annual dividend increases -- you don't achieve that by accident.

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