This Business Is Growing, Resilient... and 'Boring'

Longtime Stansberry Research readers know we love highlighting the power of investing in "boring" businesses...

These companies may not generate headlines like high-growth market darlings, and their business models are rarely complex or revolutionary.

But that doesn't mean they're bad investments. Instead, solid boring businesses make steady sales and profits, which lead to solid gains in the market. And that could actually make them better investments than the headline-grabbing growth stocks.

Today's company is a great example. You may not know it by name. But there's a good chance that you've seen its products, even if you didn't realize it...

Cintas (Nasdaq: CTAS) makes, rents, and sells work uniforms. About 70% of its customers are in the services industry, meaning places like hospitals, restaurants, and hotels. The other 30% of Cintas' customers consist of "goods producing" companies – fields like manufacturing and construction.

Cintas operates in a highly fragmented industry, which is a reason it only does business with 1 million of the 16 million businesses in the U.S. This gives the company plenty of room to grow.

And it's working hard to bring on new customers... The company reports that 60% of its new clients had never been part of a uniform-rental program.

Beyond providing uniforms, Cintas also offers cleaning, safety, and first-aid products and services. While this is only a small part of Cintas' business, it goes a long way toward giving the company a clear advantage over the competition.

As a one-stop shop, Cintas can keep customers from turning to other uniform suppliers, since they can get whatever they need from one company... This also gives Cintas incredible size and scale, allowing it to crowd out smaller competitors. In fact, Cintas has bought out some of these smaller companies as a way to grow its reach.

And its products and services are always in demand. This lets the company shrug off any macroeconomic issues and perform no matter what's going on in the broader economy. This is evident in Cintas' steady sales growth – annual sales have only fallen three times since 1980.

And the strength continued in Cintas' most recent quarter...

The company beat estimates for both revenue and earnings. CEO Scott Farmer added that the U.S.'s deceleration in COVID-19 infections, combined with the easing of restrictions, helped drive stronger demand for Cintas' personal protective equipment. That's because more Cintas customers have reopened to the public, but they still need protective gear as the pandemic continues. The company anticipates this momentum will continue into its fourth quarter.

Even the full 2021 fiscal year, which ends in May, Wall Street expects Cintas to slightly grow its sales from the 2020 fiscal year. This is especially impressive considering the strong headwinds posed by the pandemic.

So during one of the toughest times for businesses anywhere, Cintas has performed well. And its shares have followed suit... The stock has more than doubled from its March 2020 low.

By the numbers, Cintas has a market cap of $35 billion. Over the past 12 months, it has reported $6.9 billion in sales. Of that total, about $1.7 billion has flowed down to earnings before interest, taxes, depreciation, and amortization – good for an EBITDA margin of 24%. For comparison, the average S&P 500 company has an EBITDA margin of about 19%.

And Cintas loves to reward shareholders with these earnings...

Over the past 12 months, it has paid $640 million worth of dividends and bought back $369 million worth of its own shares. And the money flowing to shareholders should continue to grow...

Cintas has raised its dividend payout every year for the past 37 years. That makes it one of the rare "Dividend Aristocrats" – companies that have upped their dividend amounts for at least 25 consecutive years.

This makes Cintas a great company to invest in no matter what's going on in the broader economy. You may not have known about it, but it's one of the best "forever" stocks to own.

Sometimes investing is simple.