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Bad economies generally don’t affect termites or their enemies. Infestation isn’t the sort of problem that homeowners put off to save money. So it shouldn’t come as a surprise that the two stocks associated with termite and pest control carry strong IBD Earnings Stability Ratings. ServiceMaster ( SERV ) has a Stability Rating of 19 on a gauge that runs from zero (most calm) to 99 (wild). The midcap stock went public in June 2014. The stock broke out of its first base in November 2014 and advanced 46% before starting to consolidate in March 2015. Since then, the stock has sketched several bases without gaining much after clearing the patterns. As a result, the base count remains first stage. As a stock advances it pauses to consolidate, and breakouts from the first two bases generally do better than those from later consolidations. ServiceMaster lost money in 2011-12, but it turned a profit of 62 cents a share in 2014. The Street expects earnings growth to step up 33% when the company reports unaudited 2015 results Feb. 25 before the open. Revenue is expected to rise 5.8%. Growth investors might be tempted to snub steady growers, but ServiceMaster has attracted quality fund support. Fidelity Contrafund ( FCNTX ) and Skagen Global Fund started buying shares in Q4. Fidelity Magellan ( FMAGX ) added to an existing position. The building maintenance and services industry group was No. 22 among 197 industry groups, as of Wednesday’s IBD. Six weeks ago, the group was No. 81. A strong industry group is important to a stock’s success, especially in a shaky stock market. Rollins ( ROL ) is also known for taking on termites and other pests, though it might be better known under its Orkin brand. The stock carries an Earnings Stability Rating of 1, which is about as calm as earnings get. In the past five years, earnings grew a respective 12%, 11%, 10%, 12% and — in 2015 — 11%. Revenue growth is generally in the 5% to 6% range. The Street expects earnings to grow 10% in 2016. Rollins is working on a first-stage base, thanks to an undercutting of its previous recent low. When the low of a pattern undercuts the low of the previous pattern, the base count is erased and restarted. In this case, the prior base also was first-stage. The reset reflects the driving out of weak holders. When the weak holders abandon a stock, the remaining strong holders make a breakout more likely to work. Funds added to their overall stake in Rollins in each of the final three quarters of 2015. Three funds rated A+ added to existing positions in Q4. In a stronger stock market, slow growers such as ServiceMaster and Rollins probably wouldn’t be of much interest to IBD-style investors. However, right now the market appears to rewarding caution. Image provided by Shutterstock . Scalper1 News
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