Business services providers use their specialized expertise to help enterprises streamline operations and cut costs. Still, investors are uneasy as firms face challenges from AI-driven disruptors and tightening corporate budgets. These doubts have certainly contributed to services stocks’ recent underperformance - over the past six months, the industry’s 5.3% gain has fallen behind the S&P 500’s 11.7% rise.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Keeping that in mind, here are two resilient services stocks at the top of our wish list and one we’re swiping left on.
One Business Services Stock to Sell:
SAIC (SAIC)
Market Cap: $4.64 billion
With over five decades of experience supporting national security missions, Science Applications International Corporation (NASDAQ:SAIC) provides technical, engineering, and enterprise IT services primarily to U.S. government agencies and military branches.
Why Do We Steer Clear of SAIC?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 2.1% annually over the last two years
- Projected sales for the next 12 months are flat and suggest demand will be subdued
At $102.67 per share, SAIC trades at 11.5x forward P/E. Read our free research report to see why you should think twice about including SAIC in your portfolio.
Two Business Services Stocks to Watch:
Stride (LRN)
Market Cap: $2.87 billion
Formerly known as K12, Stride (NYSE:LRN) is an education technology company providing education solutions through digital platforms.
Why Should You Buy LRN?
- Rapid growth in enrollments demonstrates strong market adoption
- Free cash flow margin grew by 7.4 percentage points over the last five years, giving the company more chips to play with
- Rising returns on capital show management is finding more attractive investment opportunities
Stride’s stock price of $66.21 implies a valuation ratio of 8x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .
Rumble (RUM)
Market Cap: $2.26 billion
Founded in 2013 as a champion for content creator rights and free expression, Rumble (NASDAQ:RUM) is a video sharing platform that positions itself as a free speech alternative to mainstream platforms, offering creators more favorable revenue-sharing opportunities.
Why Are We Positive On RUM?
- Impressive 85.5% annual revenue growth over the last four years indicates it’s winning market share this cycle
- Exciting sales outlook for the upcoming 12 months calls for 202% growth, an acceleration from its two-year trend
Rumble is trading at $6.67 per share, or 37x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
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