Weekly Pick: CTAS
At the Monthly 50EMA for the first time since COVID
I’ve had CTAS on my watchlist for a while now. It’s a strong Tier 1 stock in my scoring model pulling back in the context of a multi-decade uptrend. I like trading off these kinds of risk levels much more than chasing breakouts. The line of defense is clear and the probability of institutional defense in this zone is high.
Cintas Corporation
Cintas provides uniforms, facility services, and safety/compliance solutions to businesses.
It’s a recurring service model tied to daily operations. Once implemented, it tends to stay in place; their customer retention is very high.
70% of revenue comes from service businesses (hotels, restaurants, healthcare, etc.).
Fundamentals & Ownership
Market capitalization $70B
Current P/E 36.92 | Forward P/E 32.19
Sales and EPS up every year since 2018
Institutions hold 65% of the float
Insiders hold 14% of the float
CTAS is the definition of consistent execution. Consistency reduces downside volatility and improves bounce probability at support.
Technicals
Retesting the Monthly 50EMA for the first time since COVID.
Held the 200EMA test on the Weekly .
Reclaimed the 8EMA on the Daily.
The majority of the pullback already happened. This is now a second test of the zone and that’s where I’m interested.
Monthly
Weekly
Daily
Risks
If this loses the Monthly 50 without a quick recovery, the setup changes. No reason to sit through that.
Correlation is elevated so CTAS is not immune to a broad market downdraft.
How I’m Trading It
I’m trading this with shares at the current level. If we get a wick below the 50EMA on the Monthly I’m planning to go heavier on shares and add June calls.
This doesn’t need a big move for options to payoff. A controlled bounce is enough.
If it responds, I’ll take the first impulse move, sell calls into strength, and manage shares with a trailing sell-stop.
The 50 on the Monthly is my risk level.
I trade what I post.
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