Business services providers use their specialized expertise to help enterprises streamline operations and cut costs. 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 2.3%. This drop mirrored the S&P 500’s decline.

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. With that said, 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:

ICF International (ICFI)

Market Cap: $1.56 billion

Operating at the intersection of policy, technology, and implementation for over five decades, ICF International (NASDAQ: ICFI) provides professional consulting services and technology solutions to government agencies and commercial clients across energy, health, environment, and security sectors.

Why Does ICFI Worry Us?

1. Sales pipeline suggests its future revenue growth may not meet our standards as its average backlog growth of 4.3% for the past two years was weak
2. Estimated sales decline of 6.2% for the next 12 months implies a challenging demand environment
3. Underwhelming 7.6% return on capital reflects management’s difficulties in finding profitable growth opportunities

At $84.90 per share, ICF International trades at 10.6x forward price-to-earnings. To fully understand why you should be careful with ICFI, check out our full research report (it’s free).

Two Business Services Stocks to Watch:

Iridium (IRDM)

Market Cap: $3.00 billion

With a constellation of 66 low-earth orbit satellites providing coverage to every inch of the planet, Iridium Communications (NASDAQ: IRDM) operates a global satellite network that provides voice and data services to customers in remote areas where traditional telecommunications are unavailable.

Why Could IRDM Be a Winner?

1. Rapid growth in commercial subscribers demonstrates strong market adoption
2. Share repurchases have amplified shareholder returns as its annual earnings per share growth of 214% exceeded its revenue gains over the last two years
3. IRDM is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its recently improved profitability means it has even more resources to invest or distribute

Iridium’s stock price of $27.38 implies a valuation ratio of 23.5x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it’s free.

Liquidity Services (LQDT)

Market Cap: $959.1 million

Powering what it calls the "circular economy" with over 5.5 million registered buyers across its platforms, Liquidity Services (NASDAQ: LQDT) operates online marketplaces that connect buyers and sellers of surplus assets, from consumer returns to industrial equipment to government property.

Why Will LQDT Beat the Market?

1. Impressive 20.4% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Share repurchases have amplified shareholder returns as its annual earnings per share growth of 23.5% exceeded its revenue gains over the last two years
3. Improving returns on capital reflect management’s ability to monetize investments

Liquidity Services is trading at $30.76 per share, or 17.7x forward EV-to-EBITDA. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.

Put yourself in the driver’s seat by checking 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 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.