05/2017 KIPLINGER’S PERSONAL FINANCE 59COURTESY HOME DEPOT
with 25% of the U.S. market in in-
dustries such as hotels, casinos, food-
service firms and manufacturers.
Cintas’s market share will grow to 31%
when it completes a $2.2 billion deal to
buy rival G&K Services (GK) this year.
About 90% of Cintas’s business is do-
mestic. Even in the sluggish economy
of the past seven years, the firm shone.
Analysts expect sales in the fiscal year
that ends this May to reach $5.2 billion
(excluding G&K’s revenues), up from
$3.5 billion in fiscal 2010. They see
earnings of $4.60 per share in the cur-
rent year, compared with $1.40 in 2010.
Besides its main business of renting
(and cleaning) uniforms, Cintas has
added other fee-producing services,
such as providing first-aid supplies to
clients on its routes. Brokerage Robert
W. Baird says the purchase of G&K
will give Cintas “unprecedented scale”
as well as cost-saving opportunities,and Baird expects annual percentage
earnings growth in the “high teens”
through 2020. Cintas also boasts a
strong balance sheet and has raised
its dividend for 33 straight years. It did
so even during the 2007–09 recession,
despite a temporary profit slump.3
HERSHEY (HSY, $108) If Trump’s
centerpiece idea is to strengthen
U.S. manufacturing, Hershey could be
the litmus test. The company’s choco-
late is as American as a brand can be,
holding 46% of the U.S. market. And
Hershey still does a huge portion of
its production in its namesake Penn-
sylvania town, where Milton Hershey
set up shop in the early 1900s. In 2016,
the firm racked up $7.4 billion in sales,
83% in the U.S. and Canada. Its brands
extend well beyond chocolate, includ-
ing Bubble Yum, Good & Plenty, Jolly
Rancher and Twizzlers.Food rival Mondelez International
(MDLZ) highlighted the value of Her-
shey’s pantry last summer by offering
to buy the company for $107 per share,
or $23 billion. The bid was rejected by
the philanthropy that Milton Hershey
set up to hold 80% of the voting power
of the company’s stock. Hershey could
argue that it does very well alone: The
company gets high marks for generat-
ing strong shareholder returns over the
past 10 years. And new CEO Michelle
Buck took over on March 1 with a
promise to cut at least $100 million in
costs in each of the next three years to
further bolster profits. The cuts could
also free up cash for new-product de-
velopment and growth overseas. Any
Trump lift to the economy could be
extra sauce on the sundae for Hershey.4
HOME DEPOT (HD, $145) The re-
tailer’s earnings and stock price
have had phenomenal runs as the U.S.
housing market has recovered from
the plunge that began in 2006. And the
nation’s largest home-improvement
retailer remains in great shape to ben-
efit if Trump’s policies boost domestic
job growth and wages, providing
Americans with more to spend on their
abodes. About 90% of the firm’s $95
billion in annual sales are made in the
U.S., with the rest in Canada and Mex-
ico. To its credit, Home Depot’s leader-
ship ended a foray into China in 2012,
after Chinese consumers rejected the
do-it-yourself improvement concept.
Since then, Home Depot has focused
heavily on improving efficiency in its
U.S. operations, helping to drive profits
to record levels. The company earned
$6.45 per share in the fiscal year that
ended January 31, up 18% from the
previous year. Wall Street expects
profits to rise by 12% in the year that
ends next January. Even if higher mort-
gage rates slow home construction
somewhat, Home Depot derives 65%
of sales from home-maintenance
spending, compared with 35% from
new building, according to research
firm Morningstar. Also, aging housing
stock coupled with aging baby boomers