Business services providers play a critical role for enterprises, assisting them with everything from new hardware integrations to consulting and marketing. These firms have helped their customers unlock huge efficiencies, so it’s no surprise the industry has posted a 27.8% gain over the past six months, beating the S&P 500 by 4.8 percentage points.
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. With that said, here are two services stocks we think can generate sustainable market-beating returns and one we’re passing on.
One Business Services Stock to Sell:
Korn Ferry (KFY)
Market Cap: $3.64 billion
With clients including 97% of the S&P 100 and operations in 103 offices across 51 countries, Korn Ferry (NYSE: KFY) is a global consulting firm that helps organizations design optimal structures, recruit talent, develop leaders, and create effective compensation strategies.
Why Does KFY Fall Short?
- Sales tumbled by 1.3% annually over the last two years, showing market trends are working against its favor during this cycle
- Projected sales growth of 2.7% for the next 12 months suggests sluggish demand
- Eroding returns on capital suggest its historical profit centers are aging
At $69.40 per share, Korn Ferry trades at 13.2x forward P/E. To fully understand why you should be careful with KFY, check out our full research report (it’s free for active Edge members).
Two Business Services Stocks to Watch:
Tetra Tech (TTEK)
Market Cap: $9.08 billion
With a 50-year legacy of "Leading with Science" and operations on all seven continents, Tetra Tech (NASDAQ: TTEK) provides high-end consulting and engineering services focused on water management, environmental solutions, and sustainable infrastructure for government and commercial clients worldwide.
Why Are We Fans of TTEK?
- Impressive 15.8% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Backlog has averaged 10.2% growth over the past two years, showing it has a pipeline of unfulfilled orders that will support revenue in the future
- Robust free cash flow margin of 9.8% gives it many options for capital deployment
Tetra Tech’s stock price of $34.57 implies a valuation ratio of 24.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
RB Global (RBA)
Market Cap: $19.5 billion
Born from the 1958 founding of Ritchie Bros. Auctioneers and rebranded in 2023, RB Global (NYSE: RBA) operates global marketplaces that connect buyers and sellers of commercial assets, vehicles, and equipment across multiple industries.
Why Is RBA a Top Pick?
- Impressive 33.6% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 19.6% annually
- Strong free cash flow margin of 15.2% enables it to reinvest or return capital consistently
RB Global is trading at $105.05 per share, or 25.9x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.
Stocks We Like Even More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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