It’s summertime, and on Wall Street that usually means low volume days and sluggish price movements.  But Rollins (NYSE: ROL), a pest-control company, has a nifty ten-year record of summer gains.  The stock has rallied 80% of the time during the summer months since 2006.  A move above $29 could take the stock to the mid-$30 range over the summer months if the pattern repeats.

Consider Rollins’ stock delivers as sure as ants will invade your summer picnic:

• Rollins shares have gained for eight out the last ten years over the summer months, June to September
• The average gain for the three month period is 6.26% with four periods delivering over 10% gains and averaging 13.36%
• Four of the six more conservative periods were positive with an average gain of 1.53%.
• The largest down summers, 2013 and 2014 were both less than 3%

Buzzing Around in the Rain

Rollins’ summer gains seem to be related to rainfall and how it increases mosquito populations, especially in Texas and states on the southeast coast (Florida, Georgia and the Carolinas).   On the four years where Rollins delivered its biggest gains during the summer, (2007, 2008, 2012 and 2015) rainfall was above normal, or normal, in Texas during the months of May to September; while Florida, Georgia and the Carolinas had rainfall that was above normal or normal for three out of the four years.

The data suggests that there is a positive correlation between above-average rainy seasons in Texas and the Southeast, and the price of Rollins stock.   This year’s forecast calls for above normal or normal rainfall in these two key regions of the U.S.—even as I write this, tropical depression Bonnie is bearing down on the Carolinas.

There is also the unknown potential for mosquito-borne Zika virus outbreaks in the U.S. and elsewhere this summer, which could lead to increased demand for exterminator or preventive services, further adding to potential rise in the stock. And as the summer Olympic Games in Rio draw closer, Zika headlines will saturate the news.  

Rollins is the Leader in Pest Control

Rollins is a global provider of pest control services with businesses in the United States, Australia, the Caribbean and Canada through its Orkin, Critter Control, Home Team, and other regional brands.  The company aggressively buys other pest control firms and services both businesses and private homes.

Rollins doesn’t change the name of the companies it buys, which maintains company loyalty—and sales.  For example, Rollins IFC brand serves the food and energy industry, while Home Team focuses on pest control for builders.   In Australia, Rollins owns Murray Pest Control and Statewide Pest Control, brands that serve different niches. 

And while the shares have been quiet since my original recommendation in February 2016, it nearly broke out above its recent trading range on May 27, and if it can break above $29, we may see shares moving to the mid to high 30s over the next few weeks.  To be sure, I like Rollins for the long term, but a nice seasonal move wouldn’t hurt.

Rollins has delivered higher revenues and earnings for the past 40 quarters.  In the most recent quarter, the company’s revenue rose 6.6% to about $352.7 million, compared to $330.9 million in 2015’s first quarter.  And the company continues to make money, with income before taxes rising 9.8% to $51.2 million, compared to $46.6 million in 2015.   Net income rose 5.4% to $31.9 million or $0.15 per share, compared to net income of $30.3 million or $0.14 per diluted share a year earlier.

Rollins Inc. (ROL) – Buy from $27 to $29. Raise Sell Stop at $24.  

Portfolio Summary (I have positions in many of these companies.)

This Week’s Changes:

Alert – Biorad Laboratories (BIO) – Raise Sell Stop to $138. Bought 5/16/15 at $146.25.  5/27/16 closing price $148.72.

No Changes in the following positions:

Amgen (AMGN) – Buy until $161 – Bought 2/1/16 at 152.75. 5/27/16 closing price $156.74. Sell Stop $149.

Biorad Laboratories (BIO) – Bought 5/16/15 at $146.25.  5/27/16 closing price $148.72–  Raise sell Stop to $138.

Celldex Therapeutics (CLDX) – Buy $4-$7.   5/27/16 closing price $4.33.  

Cerus Corp. (CERS) – Buy Range $5-$7. This stock was initially recommended 11/16/15. Bought 11/16/15 at $5 – 5/27/16 closing price $5.51;

Emergent Biosolutions (EBS) Buy $39-$43 – Bought 5/16/16 at $39.44.  5/27/16 closing price $43.70. 

Medidata Solutions (MDSO) – Buy $40-$42.  Sell Stop changed to $39. Bought on 3/7/16 at $36 –  5/27/16 closing price $43.68. 

Meridian Biosciences (VIVO) – Buy range expanded to $19-23 – 5/27/16 closing price $19.42.  Stock initially recommended on 6/29/15. 

Novo Nordisk A/S (NVO) – Buy $55-59 (4/7/16).  Sell Stop to $49.  Recommended 12/21/15.  Bought at $55 on 12/21/15 –  5/27/16 closing price $55.44.   

White Wave Foods Company (WWAV) – Buy range expanded $42 up to $46.  5/27/2016 closing price $44.81. 

Rollins Inc. (ROL) – Buy at $27-29. Bought 2/22/16 at $27.38. 5/27/16 closing price $28.42. Raise Sell Stop at $24.