These stocks will benefit as reopening puts focus on office cleanliness and hygiene, RBC says

Published Sun, Sep 5 20218:25 AM EDT

Commercial service companies are set to benefit as offices welcome back workers with a heightened focus on cleanliness and safety, according to RBC Capital Markets. "Reopening and focus on Health, Hygiene, and Safety due to COVID and ESG has driven increased demand for Commercial Services. In particular, solid demand for cleaning/disinfecting solutions and a greater propensity to outsource facility, uniform rentals, and food services should drive solid growth for Commercial Service providers," RBC's Ashish Sabadra and John Mazzoni said in a report Thursday. Digital transformation should also help commercial service companies improve efficiency and employee and customer satisfaction, the firm said. RBC initiated coverage on three commercial service names with outperform ratings. Take a look at the firm's picks. Ecolab Ecolab is a company specializing in water, hygiene and infection prevention services. "ECL's leadership in hygiene/sanitizing solutions and water treatment should benefit from the increased focus on Hygiene due to COVID and water conservation with ESG," the analysts said. RBC highlighted Ecolab's strength in research and development, noting its thousands of patents and predictive analytics technology advantages. The company's breadth of products and services across dozens of verticals provides "unmatched scale in a highly fragmented industry," the analysts said. RBC set a price target of $260 on the stock, representing a 15% gain from here. Cintas Cintas provides corporate uniforms and apparel, as well as first aid, safety, cleaning and restroom products and services. The company is the market leader in the uniform rental space, according to RBC, which values the market at $25 billion. "Increased emphasis on health and hygiene due to COVID should increase the propensity to outsource uniform rental and adoption of facility services," the analysts said. Healthcare, education and government organizations are potential growth opportunities for Cintas to expand its customer base, according to RBC. Cintas' scale provides advantages in operating leverage, pricing and vertical integration, which should help the company fight inflationary pressures, RBC said. RBC set a $450 price target on Cintas, implying 13% upside. Vivint Vivint also received an outperform rating from RBC. The smart home company's products include home security and camera systems. The company's "proprietary end-to-end solution" lowers subscriber acquisition costs, accelerates subscribers growth and boosts revenue, according to RBC. Vivint made headlines earlier this year after paying a $20 million settlement to the Justice Department . Sales representatives at Vivint stole people's personal information to approve other potential customers for loans, and also sold false debt to third-party debt collectors, according to the Justice Department. RBC expressed optimism in Vivint's new management. The firm highlighted CEO David Bywater, saying he "is focused on enhancing customer value, scaling operations, and accelerating growth through partnerships (Solar, Insurance, and potentially 2-3 other areas)." The firm also noted the stock is trading at a relatively cheap level considering Vivint's earnings and growth. RBC's price target of $15 on Vivint is 15% higher than the stock's last close. —CNBC's Michael Bloom contributed reporting.

Cintas provides uniform and cleaning services for businesses.

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Commercial service companies are set to benefit as offices welcome back workers with a heightened focus on cleanliness and safety, according to RBC Capital Markets.