Business services providers thrive by solving complex operational challenges for their clients, allowing them to focus on their secret sauce. Furthermore, the demand for their offerings is rising as more clients outsource non-core functions, a trend that has enabled the industry to return 29.3% over the past six months. At the same time, the S&P 500 was up 24.7%.

Regardless of these results, investors must exercise caution as many companies in this space are sensitive to the ebbs and flows of the broader economy. Keeping that in mind, here are two resilient services stocks at the top of our wish list and one that may face trouble.

One Business Services Stock to Sell:

Napco (NSSC)

Market Cap: $1.52 billion

Protecting everything from schools to government facilities since 1969, Napco Security Technologies (NASDAQ: NSSC) manufactures electronic security devices, access control systems, and communication services for intrusion and fire alarm systems.

Why Does NSSC Fall Short?

1. Annual revenue growth of 3.4% over the last two years was below our standards for the business services sector
2. Subscale operations are evident in its revenue base of $181.6 million, meaning it has fewer distribution channels than its larger rivals
3. Estimated sales growth of 3.1% for the next 12 months is soft and implies weaker demand

At $42.80 per share, Napco trades at 35.9x forward P/E. Dive into our free research report to see why there are better opportunities than NSSC.

Two Business Services Stocks to Watch:

Amphenol (APH)

Market Cap: $150.9 billion

With over 90 years of connecting the world's technologies, Amphenol (NYSE: APH) designs and manufactures connectors, cables, sensors, and interconnect systems that enable electrical and electronic connections across virtually every industry.

Why Are We Backing APH?

1. Market share has increased this cycle as its 22.4% annual revenue growth over the last two years was exceptional
2. Enormous revenue base of $18.82 billion provides significant distribution advantages
3. Incremental sales over the last two years have been highly profitable as its earnings per share increased by 29.1% annually, topping its revenue gains

Amphenol is trading at $124 per share, or 43.9x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.

UL Solutions (ULS)

Market Cap: $14.37 billion

Founded in 1894 as a response to the growing dangers of electricity in American homes and businesses, UL Solutions (NYSE: ULS) provides testing, inspection, and certification services that help companies ensure their products meet safety, security, and sustainability standards.

Why Should ULS Be on Your Watchlist?

1. 7.2% annual revenue growth over the last two years surpassed the sector average as its services resonated with customers
2. Free cash flow margin expanded by 4.8 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
3. Stellar returns on capital showcase management’s ability to surface highly profitable business ventures

UL Solutions’s stock price of $71.55 implies a valuation ratio of 38.8x 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

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-micro-cap company Kadant (+351% 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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