The Atlanta Journal-Constitution published an article in July discussing the “skyrocketing” growth of Atlanta. That’s got me thinking about Atlanta stocks.
According to AJC, nearly 63,000 people moved into the 11 counties that make up Atlanta between April 2023 and April 2024. According to Axios reporting, Atlanta had the largest change in population between 2022 and 2023 among U.S. cities with at least 250,000 people.
Other data suggests that 1.8 million people will relocate to Atlanta between now and 2050, bringing the city’s population to eight million. Atlanta is already the sixth-largest metro area in the U.S.
Data from KnowAtlanta, a relocation guide for the city, says there are 19 Fortune 500 companies in the Atlanta area with another 16 in the Fortune 1000. From those 35 companies, I ought to be able to find three Atlanta stocks to bet on over the long haul.
Here are my three stocks to buy to ride Atlanta’s growth.
Pulte Group (PHM)
Pulte Group (NYSE:PHM) is ranked 259th on Fortune 1000. Its official address is 3350 Peachtree Road NE, Suite 1500, Atlanta, Georgia 30326.
Bill Pulte founded the Atlanta-based homebuilder in 1950. It is now the third largest home builder in America operatingin over 40 major cities. Since its founding, it’s delivered almost 750,000 homes to American homebuyers.
Like many home builders in recent years, business has been good. In 2019, its pre-tax income was $1.34 billion. By 2023, it had mushroomed to $3.45 billion, a compound annual growth rate (CAGR) of 26.7%. Not surprisingly, since the beginning of 2020, its stock’s appreciated by over 215%.
Pulte finished the second quarter with a backlog of 12,982 homes valued at $8.1 billion. Given its Q2 2024 revenue was $4.4 billion, the backlog should be taken care of in two quarters. Filling the backlog, it had 7,649 net new orders in the quarter worth $4.4 billion.
“As demonstrated by our 27.1% return on equity* for the past 12 months, we continue to successfully navigate these conditions by actively managing sales price, pace and starts on a community-by-community basis with the goal of realizing high returns on invested capital and equity over time,” stated CEO Ryan Marshall in its Q2 2024 press release.
The U.S. housing shortage will keep Pulte busy for years to come.
Corpay (CPAY)
Corpay (NYSE:CPAY) is ranked 831st in the Fortune 1000. The company’s official address is 3280 Peachtree Road, Suite 2400, Atlanta, Georgia 30305.
In May, I recommended Corpay stock as a blue-chip stock to buy which is flying under the radar of most investors.
“What if I told you that you could own a business that’s grown revenues and adjusted earnings per share by 18% and 20% annually since 2010, but you only have to pay 19.6x its trailing 12-month earnings and 13.9x forward earnings?” I wrote on May 31.
Corpay is the new name of Fleetcor Technologies, a company that’s become popular with businesses trying to keep a lid on employee travel and vehicle-related expenses by keeping track of them through Corpay’s payment solutions.
Despite doing an excellent job growing revenues and earnings, its shares never seem to be able to move much higher than $300.
Based on its trailing 12-month free cash flow of $1.42 billion and an enterprise value of $25.88 billion, it has a free cash flow yield of 5.5%, which suggests its shares are currently fair value and worth owning.
Rollins (ROL)
Rollins (NYSE:ROL) is ranked 946th in the Fortune 1000. Its official address is 2170 Piedmont Rd. NE, Atlanta, Georgia 30324.
I’ve liked Rollins for a long time because it offers services whose need won’t go away — it provides pest control services to 2.8 million customers worldwide through brands such as Orkin and Critter Control — and it’s a family-controlled business founded by brothers O. Wayne Rollins and John Rollins in 1964, who acquired the Orkin Exterminating Company.
The rest is history.
In May 2016, I included Rollins in a list of 10 top stocks every retirement portfolio should have. I liked the fact that 80% of its revenues were recurring. Fast forward to Q1 2024. Its business model continues to deliver recurring revenue.
The aspect of its 2023 report I like to see growing is its free cash flow. It generated $495.9 million in free cash flow last year, 13.9% higher than a year ago, converting 113% of its $439.1 million in net income.
While its free cash flow yield is low, the strength of its market share — it controls 20% of the commercial pest control market in North America — makes it an excellent long-term hold.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
