Business services providers play a critical role for enterprises, assisting them with everything from new hardware integrations to consulting and marketing. Furthermore, the demand for their offerings is rising as more clients outsource non-core functions, a trend that has enabled the industry to return 9.1% over the past six months, almost identical to the S&P 500.
Although these companies have produced results, only a handful will thrive over the long term as AI-driven upstarts are rapidly taking share from the incumbents. On that note, here are three services stocks boasting durable advantages.
Coherent (COHR)
Market Cap: $42.82 billion
Created through the 2022 rebranding of II-VI Incorporated, a company with roots dating back to 1971, Coherent (NYSE:COHR) develops and manufactures advanced materials, lasers, and optical components for applications ranging from telecommunications to industrial manufacturing.
Why Is COHR Interesting?
- Impressive 16.6% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Market share is on track to rise over the next 12 months as its 23.4% projected revenue growth implies demand will accelerate from its two-year trend
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 69.9% annually
Coherent’s stock price of $230.27 implies a valuation ratio of 38.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Booz Allen Hamilton (BAH)
Market Cap: $10.85 billion
With roots dating back to 1914 and deep ties to nearly all U.S. cabinet-level departments, Booz Allen Hamilton (NYSE:BAH) provides management consulting, technology services, and cybersecurity solutions primarily to U.S. government agencies and military branches.
Why Are We Positive On BAH?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 7.8% annual sales growth over the last five years
- Economies of scale give it distribution advantages and fixed cost leverage when sales grow
- Returns on capital are growing as management capitalizes on its market opportunities
At $89.83 per share, Booz Allen Hamilton trades at 15.1x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Brown & Brown (BRO)
Market Cap: $22.72 billion
With roots dating back to 1939 and operations spanning 44 U.S. states and 14 countries, Brown & Brown (NYSE:BRO) is an insurance brokerage and risk management firm that markets and sells insurance products across property, casualty, and employee benefits sectors.
Why Is BRO a Good Business?
- Projected revenue growth of 21.7% for the next 12 months is above its two-year trend, pointing to accelerating demand
- Earnings per share grew by 23.7% annually over the last two years, massively outpacing its peers
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Brown & Brown is trading at $68 per share, or 15.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.