🗞 12 "Boring" Stocks That Crush The Market

Happy Sunday! 👋 

Today we’re taking a look at the “boring” compounders — the companies that fly under everyone’s radars, but consistently generate stellar returns for shareholders.

Let’s dive in!

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12 “Boring Stocks” That Crush the Market

It’s fun to talk about the world’s most popular stocks.

After all, they’re the most controversial, and typically stir up the most engagement.

But this week, we’re doing something different.

We’re taking a look at the boring companies. These are the companies with business descriptions that will make you yawn. They are old, unexciting, and operate in some of the world’s slowest moving industries.

But thanks to limited competition and disciplined capital allocation, many of these so-called “boring businesses” produce extraordinary outcomes for investors.

If you invested in any of the following 12 companies, you would have crushed the S&P 500 over the last 10 years.

Here they are:

1. United Rentals

United Rentals is the largest equipment rental company in the world.

They buy general and specialty equipment directly from the manufacturer, rent it to customers (usually for multiple years), then sell it on the used market.

Their extensive network of locations is a major advantage versus peers, as it allows them to service multi-location customers and reduces transportation costs.

• 10yr Total Return: +1,117%

2. Amphenol

Amphenol makes all the small tech components that the world overlooks. These include products like interconnects, sensors, & antenna solutions.

Their end markets are wide ranging including automotive, aerospace, and defense, but most recently, the data center boom has provided a huge boost to Amphenol’s business.

• 10yr Total Return: +1,046%

3. Caterpillar

Caterpillar is the world’s leading manufacturer of heavy machinery. They sell and lease equipment through a network of independent dealers. And their end markets range from general construction to mining, energy, transportation, and other sectors.

Caterpillar also has a financing arm to help their end customers be able to afford Caterpillar products.

• 10yr Total Return: +1,030%

4. Cintas

For a $75 billion market cap company, Cintas might be the most unexciting business of them all.

Cintas operates a route-based service model for "dirty jobs”. They provide services like uniform rentals and laundering, facility cleaning, safety equipment maintenance, and other essential tasks that businesses prefer to outsource.

• 10yr Total Return: +830%

5. MSCI

Admittedly, investors might find MSCI more exciting than the other industrial-focused companies on this list.

Their primary business is creating and maintaining over 280,000 equity indices. These include indexes like the MSCI World Index, MSCI Emerging Markets Index, MSCI Europe Index, and many others.

Financial institutions pay MSCI licensing fees to create ETFs that track their benchmarks.

• 10yr Total Return: +780%

6. Curtiss-Wright

Curtiss-Wright designs and builds critical components to the naval, aerospace, and defense industries. These include data recorders, actuators, networking switches, and much more.

In this highly regulated industry, Curtiss-Wright is the only approved supplier for many of its parts, making it virtually impossible for customers to switch to other providers.

• 10yr Total Return: +777%

7. Old Dominion Freight Line

Old Dominion Freight Line (ODFL) is a leading "less-than-truckload" carrier that provides regional, national, and international shipping services.

Their 261 North American service centers enable ODFL to provide a 99% on-time delivery rate.

• 10yr Total Return: +755%

8. Arthur Gallagher

Arthur Gallagher is the world’s 3rd largest insurance broker and specializes in small & medium sized businesses.

By connecting their clients with appropriate insurance policies, Arthur Gallagher collects commissions from insurance carriers and service fees from customers, without taking on any underwriting risk.

Their “hub and spoke” model gives them the scale, databases, and back-office resources of a large enterprise, while maintaining local touchpoints with clients.

• 10yr Total Return: +647%

9. W.W. Grainger

Grainger is a leading online distributor of industrial parts, primarily to businesses. Their catalog has more than 30 million products in total and includes items like motors, wires, protective equipment, and much more.

With a massive network of distribution centers and over 5,000 suppliers, Grainger has major scale advantages They’re able to source items at a lower cost and deliver faster than competitors.

• 10yr Total Return: +512%

10. Rollins

Rollins is a global leader in pest control services.

As one of the largest providers in North America, Rollins — best known for their Orkin brand — benefits from higher route density than competitors, meaning they’re able serve more customers in a shorter timeframe.

• 10yr Total Return: +497%

11. O’Reilly Automotive

For the last several decades, the auto parts retailing business has been led by two companies: AutoZone and O’Reilly Automotive.

This leadership position gives O’Reilly many of the standard scale advantages that are common in the retail industry — volume discounts from suppliers, lower transportation costs from store/distribution center density, private label products, etc.

And for O’Reilly, they have consistent tailwinds at their back. The total number of cars on the road grows by ~1% every year in North America, and the average age of cars on the road increases as well, meaning they need more frequent servicing.

• 10yr Total Return: +438%

12. Waste Management

Everyone needs their trash picked up.

And Waste Management is the largest waste business in North America. 

They manage the entire waste lifecycle from pick-up and transport, to disposal (at their own landfills), recycling, and energy conversion.

Due to the stringent environmental regulations involved in opening a new landfill, it’s virtually impossible to start a new competitor to Waste Management. This allows the trash giant to consistently raise prices.

• 10yr Total Return: +393%

That’s all for this week!

If we missed any boring compounders, feel free to send them our way. We’re always looking for more!