One of my favorite “economy” stocks reported earnings results last quarter, and nobody appeared to be watching. They should be, though, as it provides some of the best data on how our economy is doing.
The company is Cintas (CTAS).
If you haven’t heard of them, you should add them to your “stocks to watch” if only for the economic implications.
In the beginning, Cintas was a uniform company. I know because I wore one of their uniforms while working in college.
The company now describes its business as renting and servicing uniforms and other garments, including flame resistant clothing, mats, mops and shop towels, and other ancillary items; and provides restroom cleaning services and supplies.
And I’ve got a better description… They do all the things that let’s American companies work. Restaurants, garages, golf courses, manufacturing facilities… you get the idea.
So, when a company like Cintas hits their earnings report out of the park and then raises their guidance for 2024? Well, you listen and start looking for a stronger economy.
What does that mean?
Well, it puts pressure on “The Magnificent Seven” and gets money moving into the rest of the market, areas of the market that work.
Last week, we talked about the materials sector. Cintas’s results put an exclamation point on that commentary, suggesting that the rest of America is getting ready to become very busy with work.
Historically, there has been high correlation between Cintas’ stock price and various employment trends.
Additionally, the earnings guidance and price trends of Paychex (PAYX) and ADP (ADP) are highly correlated with the economy. We’ll hear from Paychex tomorrow morning as they report their quarterly results.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.