Tech Stocks Aren't Always The Answer

If there’s one thing that’s undoubtedly true over the past decade, it’s that technology stocks have been blistering hot.

And it’s been for very understandable reasons – many of these companies’ products have entirely changed the way the world behaves. People stay solely connected through digital channels such as social media, students are now taking their exams online, and consumers are even utilizing digital apps that allow for grocery delivery.

But while all that sounds fun and exciting, many have overlooked simple businesses that aren’t overly flashy. This includes companies that take care of waste management, provide staffing uniforms, and even energy drink providers, to give a few examples.

Many of these companies fall into the Consumer Staples sector, whose businesses face steady demand across many economic conditions. In other words, people will want their trash picked up no matter the state of the economy, and we all obviously enjoy our caffeine buzz.

And perhaps to the surprise of some, these non-technology companies have seen wildly strong performance, with their lower beta nature providing nice shields against volatility.

Cintas Outperforms Meta

For example, Cintas CTAS, the company responsible for providing staffing uniforms and other relevant materials to employers, has gained +830% over the last decade, which compares to a +530% gain from high-flying Meta Platforms META. Cintas’ 25% annualized return over the period even outpaces the S&P 500’s +15.3% annualized return over the same period. 

And maybe even more shockingly, Cintas shares have nearly kept pace with even Microsoft over the last decade, with MSFT shares up +900% compared to Cintas’ +830% gain. While these investments are typically labeled as ‘boring,’ their stability is undeniable.

Simply put, you don’t have to buy tech stocks to see great returns. Lesser-discussed companies like Cintas have built consistent, dependable growth by doing the ‘simple’ things exceptionally well. Of course, they’re likely not to impress investors given their less-flashy nature, but sometimes boring is better.  

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This article originally published on Zacks Investment Research (zacks.com).

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