4 Stocks poised for long-term shareholder value growth

Investing in business growth, acquisitions, margin improvements, cash flow, dividends and share repurchases are among the top drivers of shareholder value today. Strangely, too few companies rely on balanced, long-term strategies that lead to significant increases in value, choosing instead to focus only on growth.

Growth is good but can come at a damaging cost to stock prices, and some investors seek more income than growth. The four titles on the list today have far-sighted management. They are leaning on value creation strategies that have been and will deliver shareholder value year after year throughout the business cycle.

Cintas: half a century of shareholder value creation

Ribbons NASDAQ: CTAS is an example of a company building value, having grown its business and improved its stock price for more than half a century. If you doubt the company’s ability to deliver value, you only need to look at the stock chart. The CTAS stock price has risen 120% over the past five years and 1,000% over the previous ten, and holders who invested in the stock before 2010 are counting their gains close to 3,000%. The bottom line is that Cintas continues to lean on the strategies that led to those gains and that future gains are in store.

Current fiscal 2024 earnings results show that revenue is growing nearly 10%, accelerating sequentially, and that margin is widening, leading the company to improve mid-year guidance. Cash flow growth has driven profits, enabling dividend distributions and opportunistic share repurchases. The dividend is low yield, less than 1%, but safe at 36% of earnings, reliable and growing aggressively. The buybacks led the quarter-end GAAP stock count to fall less than 0.1%, but enough to offset stock-based compensation and drive a 3.3% gain in stock capital. Cintas is expected to post 9% growth for the third quarter and will likely beat forecasts.

UniFirst can offer similar value to Cintas

UniFirst NYSE:UNF is another uniform and employer services specialist and a near-twin to Cintas. Among the differences are age, size and margin, which are improving over time. In light of this, Unifirst could increase its dividend over time without revenue and earnings growth, supporting higher earnings with margin efficiency, and distribution growth is expected.

The dividend payout is closer to 36% of profits and 0.85% of yield, in line with Cintas, and earnings are expected to grow this year and next, so the 20% CAGR can be sustained. As for the balance sheet, the company has no long-term debt, assets are increasing, liabilities are decreasing, and equity is increasing.

Williams-Sonoma is moving higher in terms of balance sheet strength

Williams-Sonoma New York Stock Exchange: WSM it skyrocketed after release in the fourth quarter, and the stock price could double again. The fourth quarter results highlight the strength of the business model and resilience in end markets, which did not hesitate to sell at full price. The company’s margin was above 20%, well above the target range, and left earnings, cash and balance sheet in better shape than before (and they were strong before). Details include a 25% dividend increase, dividend security and a new buyback program. The new buybacks are worth $1 billion, or about 5.5% of market capitalization, with shares at new highs.

Casey’s General Warehouses create shareholder value

Casey’s General Stores NASDAQ: CASY reported a revenue contraction for the third quarter of 2024, but that’s the worst news. The company’s results fell due to deleveraging fuel prices, but were stronger than expected in terms of domestic sales volume and strength. The company has also added new stores and expects to add another 5.5% this year.

Highlights include margin, which contracted less than expected, and cash flow. The cash flow enabled share repurchases and an increase in repurchase authorization worth approximately 2.75% of market capitalization. The dividend also yields a solid 0.6% and the distribution is growing and incredibly safe. The payout ratio is less than 15% of earnings, with no red flags on the balance sheet. This balance sheet is another fortress with ample liquidity and low leverage. Leverage is approximately 0.25X on a debt-to-asset basis and 1.1X on a liability-to-equity basis.

Before considering Cintas, you’ll want to hear this.

MarketBeat tracks Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Cintas wasn’t on the list.

While Cintas currently has a “Moderate Buy” rating among analysts, top analysts believe these five stocks are better buys.

View the five stocks here