Turning Disaster Into Gains: 3 Stocks Stand to Benefit From ‘Cannibalistic' Cricket Infestation

Residents of Elko and other towns in Nevada are being compelled to relive their lockdown memories. However, it’s not a virus that’s keeping them indoors this time. It's Mormon crickets that are forcing residents to lock them in.

Quiet neighborhoods in Nevada have been infested by ‘biblical’ swarms of crickets. Swarms of these flightless insects, numbering in thousands, are creeping everywhere and disrupting people’s lives. The invasion has not spared fields, streets, houses, or hospitals.

Steve Burrows of Northeastern Nevada Regional Hospital recounts, “It got to the point where just to get patients into the hospital, we had people out there with leaf blowers, with brooms, and …… even a tractor with a snow plow on it to push the piles of crickets and keep them moving on their way.”
According to Jeff Knight, an entomologist for the Nevada Department of Agriculture, for reasons that are yet to be determined, the crickets have a four to six-year cycle, after which they disappear for a while. However, the dormant period for Elko ended in 2019.

While Knight added that the insects are in their migratory phase and can move up to a mile a day, the swarm can't move on fast enough for the overwhelmed residents who have been dealing with the infestation for weeks.

With local vegetation and ecosystem under threat and the trail of grossness being left behind by the insects getting crushed by tires, there is a pesticide solution for those unwilling to tolerate the unenviable sights, sounds, and (of course) smells any longer. This could be a seasonal tailwind for the stocks mentioned below, as they all deal with pest control/chemicals for pests.

Corteva, Inc. (CTVA) is a major American agricultural chemical and seed company. It provides seed and crop protection solutions for the global agriculture industry.

By offering trait technologies that improve resistance to weather, disease, insects, and herbicides used to control weeds, its seed segment is engaged in developing and supplying germplasm and traits that produce optimum farm yields. Its crop protection segment provides herbicides, insecticides, nitrogen stabilizers, pasture, and range management herbicides.

Over the past three years, CTVA’s revenue has grown at a 7.2% CAGR, while its EBITDA has grown at a 13.4% CAGR.

For the first quarter of the fiscal year that ended March 31, 2023, CTVA’s net sales increased by 6% year-over-year to $4.88 billion. During the same period, the company’s operating EBITDA increased by 18% year-over-year to $1.23 billion, while its income from continuing operations increased by 5% year-over-year to $607 million.

As a result, CTVA has increased its guidance for the full-year 2023 and expects its net sales and operating EBITDA to be in the range of $18.6 billion to $18.9 billion and $3.55 billion to $3.75 billion, respectively.

Rollins, Inc. (ROL) provides pest and wildlife control services and protection against termite damage, rodents, and insects to both residential and commercial customers internationally. The company operates through three business lines: Residential; Commercial; and Termite.

Over the past three years, ROL’s revenue increased at a 10% CAGR, while its EBITDA has grown at a 14.2% CAGR. The company’s net income has grown at a 23.7% CAGR during the same time horizon.

During the fiscal first quarter that ended March 31, 2023, ROL’s revenue increased 11.4% year-over-year to $658 million. During the same period, the company’s operating income increased by 20.2% year-over-year to $112.2 million, while its EBITDA increased by 18.4% year-over-year to $139.5 million. As a result, its net income came in at $18.2 million, up 19.6% year-over-year.

In April 2023, ROL acquired FPC Holdings, LLC (Fox Pest Control) for $318 million, excluding $32 million of contingent consideration based upon attaining future growth and profitability levels.

FMC Corporation (FMC) is an agricultural sciences company headquartered in Philadelphia, Pennsylvania, which originated as an insecticide producer. It develops, markets, and sells all three crop protection chemicals (insecticides, herbicides, and fungicides) as well as biologicals, crop nutrition, and seed treatment products, grouped as plant health.

Over the past three years, FMC’s revenue increased at a 7.5% CAGR, while its EBITDA has grown at a 4.6% CAGR. The company’s net income has grown at a 15.7% CAGR during the same time horizon.

During the first quarter of the fiscal year 2023, FMC revenue increased by 4% organically, while its adjusted EBITDA increased by 2% year-over-year. Moreover, the company returned approximately $100 million to shareholders, including $25 million in share repurchases.

For the full-year 2023, FMC raised its adjusted EBITDA outlook to a range of $1.50 to $1.56 billion, reflecting 9 percent growth at the midpoint versus 2022.