Despite a struggling stock market uptrend, Tuesday's IBD 50 Stocks To Watch pick — pest control leader Rollins — is one of the top stocks to watch. Rollins stock hit a new buy point Tuesday morning before backing away during midday trade.
Stocks To Buy And Watch: Rollins
Atlanta-based Rollins provides pest and termite control services to residential and commercial customers under the Orkin and PCO brand names.
On April 27, Rollins reported first-quarter earnings results. EPS grew 7% vs. the year-ago period to 15 cents. Sales climbed 10% to $590.7 million. While sales growth was in line with prior quarters, EPS growth slowed moderately.
"Operationally, all our business lines experienced good growth during the quarter, with residential pest control up 10.2%, commercial pest control rising 9.1%, and termite increasing 13.3%," said Jerry Gahlhoff, Jr., president and chief operating officer. "On the expense side, in the first quarter, we felt significant inflationary pressures in fleet and pest control materials and supplies."
Rollins will release its second-quarter results before the market opens on July 27. The company is expected to earn 20 cents per share, an increase of 1%, on revenue of $686.4 million, up 7%, according to FactSet.
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IBD Stock Ratings
Rollins stock shows a middling 84 out of 99 Earnings Per Share Rating and a solid B out of a best-possible SMR grade of A, according to IBD Stock Checkup. The SMR Rating analyzes a company's sales, margins and return on equity, and offers a letter grade from A (the best) to E (the worst).
Meanwhile, the stock has a 91 out of 99 IBD Composite Rating. Investors can use the IBD Composite Rating to easily gauge the quality of a stock's fundamental and technical metrics.
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Rollins Stock Eyes Buy Point
Rollins shares are trying to break out past a smooth flat base's 37.07 buy point, according to IBD MarketSmith pattern recognition. Shares briefly topped the entry Tuesday morning before backing off midday to fall more than 1%. The 5% buy zone goes up to 38.92.
With a relative strength line that hit a new high Monday, Rollins is one of the top stocks to buy and watch in today's market. A strong RS line while the stock market struggles is a strong technical indicator, especially during periods of extreme market volatility.
Even though the stock is showing strength, the market outlook remains muddled. The stock market is still in an uptrend under pressure, per IBD's The Big Picture, so investors should be more defensive. Because of that, investors should wait for Rollins to show stronger price action before considering a purchase of shares.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the stock market.
