Opinions
Joe Terranova
Rollins Inc
ROL-N
BUY
Apr 15, 2024
$43.280
Stock price when the opinion was issued
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PARTIAL BUY
This is the big guy in the room, amongst a lot of smaller players. Free cash flow is huge, so they command a premium price. The small caps do well when the economy’s expanding. Half position now, and grow into a full position. Likes it. Hurricanes make for big business. Malaysian acquisition is paying off. Dividend increase of 22%.
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HOLD
Revenues were up 8% from last quarter. Free cash flows are huge. Net income up 30%. It's all about the critters from floods and hurricanes. Bed bugs is the #1 problem in the US. Problem they've had is their workforce has been immigrants, and the door has been slammed. Free cash flow is growing, and dividend's growing at a 15% clip. Quasi-recession proof.
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BUY
They do pest control. They have a long history of growing their dividend and having free cash flow. It's been volatile lately with a drop in late-2018 due to very wet weather in the U.S. which prevented them from killing pests. The hurricane season will heat up again up and drive up demand for bug exterminators. As world population grows, ROL will grow. Good entry point now.
SELL
A pest control company that's doing well during COVID. He sold this two months ago because it's trading at 75x PE (higher than Amazon's) yet it doesn't grow its earnings much, and there's infighting among the Rollins brothers who are the majority shareholders.
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Was downgraded today, but remember that Q1 is seasonally weak beacuse of weather. Q2 is seasonally stronger and expects so this year. Have a strong balance sheet and good momentum.