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Cintas Corporation (NASDAQ: CTAS): A Bear Case Theory

Cintas Corporation (NASDAQ: CTAS) offers a range of products and services to businesses, including the supply of uniforms, cleaning equipment, first aid products, fire extinguishers, and safety courses. The stock price has jumped over 40% year-to-date to over $211 as of October 23, with multiples expanding to a record 30X EBITDA. However, weakening fundamentals and the company’s challenging growth algorithm could pose future challenges for the US-based firm. This article summarizes a July bearish thesis on CTAS published by Motherlode on Value Investors Club.

A corporate office with staff members wearing company branded uniforms.

The uniform industry witnessed high demand post-pandemic as employers weren’t able to source uniforms amid a tight supply of truck drivers and low-skill labor. This offered companies like CTAS major pricing power boosted by labor market expansion. The company has transformed into efficient dense-route operators and cross-sellers of goods, which has resulted in higher margins. Furthermore, company workers aren’t unionized, which makes it easier to make route adjustments and offers relatively better incentives for cross-selling. The CTAS also executed a 4:1 stock split in early September in a bid to boost liquidity and stock access to investors.

READ ALSO 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In

However, CTAS growth and market prospects could be on the verge of decelerating as uniforms have become abundantly available due to a faltering jobs market that peaked in late 2023. Furthermore, corporations increasingly seek to trim operational overheads, which is likely impacting CTAS’s sector. Although the incumbent has snatched a fair bit of market share from its rivals, they are expected to present stiff competition moving forward. Investors should note that CTAS’s annual price hikes for supplying uniforms can also begin to deflect customers towards rivals. The company’s revenue growth target of around 7% for FY 6/25 can also be challenging to achieve. With the jobs market peaking last year amid stiff market competition, CTAS could be compelled to secure more market share to reach the 7% target. This could prompt rivals to fight hard for their turf, ultimately dragging down industry-wide product pricing and impacting bottom lines.

Despite these looming sectoral risks, the CTAS stock price has rallied this year, overlooking several high-frequency red flags. It is estimated that if markets price in a US labor force contraction by up to 2%, it could result in significant multiples compression for CTAS. Bulls are confident CTAS can capitalize on the shortcomings of rival services to attain 7% growth. Still, it could lead to aggressive pricing action that could also compress CTAS renewals in the process. Questions remain, such as whether CTAS benefits from lag in contractual pricing as they aim for 7% growth amid a volatile labor force outlook.

This isn’t the first time we see someone shorting CTAS. Five years ago, activist short seller Ben Axler also pitched shorting CTAS. The stock tripled since then.

Cintas Corporation is also not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 46 hedge fund portfolios held CTAS at the end of the second quarter, which was 46 in the previous quarter. While we acknowledge the risk and potential of CTAS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CTAS, check out our report about the cheapest AI stock.

READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and 10 Best of Breed Stocks to Buy For The Third Quarter of 2024 According to Bank of America.

Disclosure: None. This article was originally published at Insider Monkey.

AI, Tariffs, Nuclear Power: One Undervalued Stock Connects ALL the Dots (Before It Explodes!)

Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!

AI is eating the world—and the machines behind it are ravenous.

Each ChatGPT query, each model update, each robotic breakthrough consumes massive amounts of energy. In fact, AI is already pushing global power grids to the brink.

Wall Street is pouring hundreds of billions into artificial intelligence—training smarter chatbots, automating industries, and building the digital future. But there’s one urgent question few are asking:

Where will all of that energy come from?

AI is the most electricity-hungry technology ever invented. Each data center powering large language models like ChatGPT consumes as much energy as a small city. And it’s about to get worse.

Even Sam Altman, the founder of OpenAI, issued a stark warning:

“The future of AI depends on an energy breakthrough.”

Elon Musk was even more blunt:

“AI will run out of electricity by next year.”

As the world chases faster, smarter machines, a hidden crisis is emerging behind the scenes. Power grids are strained. Electricity prices are rising. Utilities are scrambling to expand capacity.

And that’s where the real opportunity lies…

One little-known company—almost entirely overlooked by most AI investors—could be the ultimate backdoor play. It’s not a chipmaker. It’s not a cloud platform. But it might be the most important AI stock in the US owns critical energy infrastructure assets positioned to feed the coming AI energy spike.

As demand from AI data centers explodes, this company is gearing up to profit from the most valuable commodity in the digital age: electricity.

The “Toll Booth” Operator of the AI Energy Boom

  • It owns critical nuclear energy infrastructure assets, positioning it at the heart of America’s next-generation power strategy.
  • It’s one of the only global companies capable of executing large-scale, complex EPC (engineering, procurement, and construction) projects across oil, gas, renewable fuels, and industrial infrastructure.
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Trump has made it clear: Europe and U.S. allies must buy American LNG.

And our company sits in the toll booth—collecting fees on every drop exported.

But that’s not all…

As Trump’s proposed tariffs push American manufacturers to bring their operations back home, this company will be first in line to rebuild, retrofit, and reengineer those facilities.

AI. Energy. Tariffs. Onshoring. This One Company Ties It All Together.

While the world is distracted by flashy AI tickers, a few smart investors are quietly scooping up shares of the one company powering it all from behind the scenes.

AI needs energy. Energy needs infrastructure.

And infrastructure needs a builder with experience, scale, and execution.

This company has its finger in every pie—and Wall Street is just starting to notice.

Wall Street is noticing this company also because it is quietly riding all of these tailwinds—without the sky-high valuation.

While most energy and utility firms are buried under mountains of debt and coughing up hefty interest payments just to appease bondholders…

This company is completely debt-free.

In fact, it’s sitting on a war chest of cash—equal to nearly one-third of its entire market cap.

It also owns a huge equity stake in another red-hot AI play, giving investors indirect exposure to multiple AI growth engines without paying a premium.

And here’s what the smart money has started whispering…

The Hedge Fund Secret That’s Starting to Leak Out

This stock is so off-the-radar, so absurdly undervalued, that some of the most secretive hedge fund managers in the world have begun pitching it at closed-door investment summits.

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Why? Because excluding cash and investments, this company is trading at less than 7 times earnings.

And that’s for a business tied to:

  • The AI infrastructure supercycle
  • The onshoring boom driven by Trump-era tariffs
  • A surge in U.S. LNG exports
  • And a unique footprint in nuclear energy—the future of clean, reliable power

You simply won’t find another AI and energy stock this cheap… with this much upside.

This isn’t a hype stock. It’s not riding on hope.

It’s delivering real cash flows, owns critical infrastructure, and holds stakes in other major growth stories.

This is your chance to get in before the rockets take off!

Disruption is the New Name of the Game: Let’s face it, complacency breeds stagnation.

AI is the ultimate disruptor, and it’s shaking the foundations of traditional industries.

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As an investor, you want to be on the side of the winners, and AI is the winning ticket.

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A New Dawn is Coming to U.S. Stocks

I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.

We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…

Should I put my money in Artificial Intelligence?

Here to answer that for us… and give away his No. 1 free AI recommendation… is 50-year Wall Street titan, Marc Chaikin.

Marc’s been a trader, stockbroker, and analyst. He was the head of the options department at a major brokerage firm and is a sought-after expert for CNBC, Fox Business, Barron’s, and Yahoo! Finance…

But what Marc’s most known for is his award-winning stock-rating system. Which determines whether a stock could shoot sky-high in the next three to six months… or come crashing down.

That’s why Marc’s work appears in every Bloomberg and Reuters terminal on the planet…

And is still used by hundreds of banks, hedge funds, and brokerages to track the billions of dollars flowing in and out of stocks each day.

He’s used this system to survive nine bear markets… create three new indices for the Nasdaq… and even predict the brutal bear market of 2022, 90 days in advance.

Click to continue reading…