Make money with Rentokil Initial's pest control

Rentokil Initial offers robust sales growth and is poised for international expansion

One of the recurrent themes in this column is that some of the best opportunities are offered by companies in important but unglamorous industries. Pest control is one sector that most definitely meets the requirements. If you own a restaurant, you are aware of how important pest control is to your business because no one wants to dine somewhere where there are flies in the soup or worse. Similar to this, people's tolerance for pests decreases as emerging markets grow wealthier and more people relocate to urban areas. One business that is well-positioned to benefit is Rentokil Initial (LSE: RTO).

Founded in the UK a little more than a century ago, Rentokil has grown internationally by acquiring businesses in other nations and incorporating them into the Rentokil brand. Rentokil now controls a large portion of the UK market. The US company Terminix was the most prominent of these acquisitions in 2022, making Rentokil the largest business in the US and the largest market globally. With operations in 90 countries, including almost all of the world's biggest cities, Rentokil is currently the largest pest control company in the world.

Rentokil Initial has big expansion goals.

Over the coming years, the global pest-control market is predicted to expand by 5% to 6% annually, and Rentokil has big plans to boost this growth. First and foremost, it wishes to spread into nations where it is not already present. Additionally, it is investing in digital technology to reduce expenses and improve the efficiency of its operations.

Additionally, the company intends to grow its hygiene and restroom business, which presently generates 20% of its income. In addition to providing a tidy sum of money, the sale of its workwear division to HIG Capital in October 2025 will help maintain the company's focus and efficiency. Between 2019 and 2024, Rentokil's revenue doubled, and its earnings per share increased by almost two-thirds (and are predicted to continue growing rapidly over the next few years). With a double-digit operating margin and a strong 7 percent return on capital employeda crucial indicator of profitabilitythe company has been able to increase its dividend sixfold since 2019 while continuing to invest in the company and maintain reasonable levels of debt. The fact that it trades at 19.4 times 2026 earnings and has a dividend yield of 2.2 percent is more than justified by all of this. Along with solid fundamentals.

There is a lot of momentum in the Rentokils stock. Rentokil was one of the FTSE 100's top performers during the second half of 2025, rising 38%. Because of this, the shares' 50 and 200-day moving averages are significantly higher. Since Morgan Stanley and other brokers have recently upgraded Rentokil, I advise you to purchase it at the current price of 471p at 6 per 1p. In that scenario, I would set the stop-loss at 316p, giving you a 930p total decline.