Rentokil May Soon Exterminate Its Growth Problems In The U.S.

2025-05-29 03:16:50 ET

Summary

• I see rising recession risks, so I'm seeking resilient stocks; Rentokil's essential services make it recession- and tariff-resistant.
• The Company's global reach, strong business model, and integration of Terminix position it for long-term growth, despite recent struggles with profit growth.
• RTO stock trades below historical valuation metrics, with improved debt levels and a stable outlook, offering a compelling entry point.
• While risks remain in US integration and debt, I believe Rentokil's potential for capital growth and dividends outweighs these—I'm rating it a 'Buy'.

Over the last few weeks, I have become more concerned about the possibility of a recession in the US. Whether caused by trade conflicts, lagging home sales , or rising consumer debt obligations, a contraction in GDP seems increasingly likely. One research executive from Barclays recently projected that the US economy will shrink by 0.1% through the final three quarters of the year. The odds of a recession from most investment banks seem to teeter around 50% on a weekly basis, based on which way the tariffs winds are blowing....

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