Business services providers play a critical role for enterprises, assisting them with everything from new hardware integrations to consulting and marketing. But increasing competition from AI-driven upstarts has tempered enthusiasm, and over the past six months, the industry has pulled back by 3.3%. This performance was similar to the S&P 500’s decline.
Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. With that said, here is one services stock poised to generate sustainable market-beating returns and two we’re steering clear of.
Market Cap: $2.78 billion
Evolving from its roots in IT staffing to become a high-end technology consulting powerhouse, ASGN (NYSE:ASGN) provides specialized IT consulting services and staffing solutions to Fortune 1000 companies and U.S. federal government agencies.
Why Do We Think ASGN Will Underperform?
At $63.02 per share, ASGN trades at 11.3x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than ASGN.
Market Cap: $4.01 billion
With over 120 offices across 33 states and a team of more than 6,700 professionals, CBIZ (NYSE:CBZ) provides accounting, tax, benefits, insurance brokerage, and advisory services to help small and mid-sized businesses manage their finances and operations.
Why Is CBZ Not Exciting?
CBIZ’s stock price of $75.86 implies a valuation ratio of 2.5x trailing 12-month price-to-sales. To fully understand why you should be careful with CBZ, check out our full research report (it’s free).
Market Cap: $14.43 billion
Founded in 2009 as a pioneer in enterprise all-flash storage technology, Pure Storage (NYSE:PSTG) provides all-flash data storage hardware and software that helps organizations manage their data more efficiently across on-premises and cloud environments.
Why Is PSTG a Top Pick?
Pure Storage is trading at $44.27 per share, or 25.1x forward price-to-earnings. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.
Put yourself in the driver’s seat by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.
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