Business services providers thrive by solving complex operational challenges for their clients, allowing them to focus on their secret sauce. But cutbacks in corporate spending and the threat of new AI products have kept sentiment in check, and over the past six months, the industry has tumbled by 1.1%. This drawdown was disheartening since the S&P 500 gained 5.7%.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. On that note, here is one services stock boasting a durable advantage and two we’re steering clear of.
Two Business ServicesStocks to Sell:
Diebold Nixdorf (DBD)
Market Cap: $2.06 billion
With roots dating back to 1859 and a presence in over 100 countries, Diebold Nixdorf (NYSE: DBD) provides automated self-service technology, software, and services that help banks and retailers digitize their customer transactions.
Why Are We Hesitant About DBD?
- Annual sales declines of 2.9% for the past five years show its products and services struggled to connect with the market during this cycle
- Negative free cash flow raises questions about the return timeline for its investments
- Negative returns on capital show that some of its growth strategies have backfired
At $55.40 per share, Diebold Nixdorf trades at 14.1x forward P/E. Read our free research report to see why you should think twice about including DBD in your portfolio.
Robert Half (RHI)
Market Cap: $4.12 billion
With roots dating back to 1948 as the first specialized recruiting firm for accounting and finance professionals, Robert Half (NYSE: RHI) provides specialized talent solutions and business consulting services, connecting skilled professionals with companies across various fields.
Why Do We Avoid RHI?
- Annual sales declines of 1.5% for the past five years show its products and services struggled to connect with the market during this cycle
- Sales were less profitable over the last five years as its earnings per share fell by 13.6% annually, worse than its revenue declines
- Diminishing returns on capital suggest its earlier profit pools are drying up
Robert Half is trading at $41.53 per share, or 15.3x forward P/E. To fully understand why you should be careful with RHI, check out our full research report (it’s free).
One Business Services Stock to Watch:
Tetra Tech (TTEK)
Market Cap: $9.48 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 Do We Like TTEK?
- Impressive 20% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Sales pipeline is in good shape as its backlog averaged 15.6% growth over the past two years
- Economies of scale give it some operating leverage when demand rises
Tetra Tech’s stock price of $35.85 implies a valuation ratio of 25.1x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. 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 Comfort Systems (+782% 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
