Laser Focus World is an industry bedrock—first published in 1965 and still going strong. We publish original articles about cutting-edge advances in lasers, optics, photonics, sensors, and quantum technologies, as well as test and measurement, and the shift currently underway to usher in the photonic integrated circuits, optical interconnects, and copackaged electronics and photonics to deliver the speed and efficiency essential for data centers of the future.

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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

3 Services Stocks in Hot Water

CNXN Cover Image

Business services providers use their specialized expertise to help enterprises streamline operations and cut costs. But increasing competition from AI-driven upstarts has tempered enthusiasm, and over the past six months, the industry has pulled back by 2.4%. This drop was disappointing since the S&P 500 held its ground.

A cautious approach is imperative when dabbling in these companies as many are also sensitive to the ebbs and flows of the broader economy. Keeping that in mind, here are three services stocks that may face trouble.

Connection (CNXN)

Market Cap: $1.79 billion

Starting as a small computer products seller in 1982 and evolving into a Fortune 1000 company, Connection (NASDAQ: CNXN) is a technology solutions provider that helps businesses and government agencies design, purchase, implement, and manage their IT infrastructure and systems.

Why Do We Think CNXN Will Underperform?

  1. Sales stagnated over the last five years and signal the need for new growth strategies
  2. Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 1% annually
  3. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 2.5% for the last five years

Connection’s stock price of $70.34 implies a valuation ratio of 20.2x forward P/E. Read our free research report to see why you should think twice about including CNXN in your portfolio.

Equifax (EFX)

Market Cap: $34.17 billion

Holding detailed financial records on over 800 million consumers worldwide and dating back to 1899, Equifax (NYSE: EFX) is a global data analytics company that collects, analyzes, and sells consumer and business credit information to lenders, employers, and other businesses.

Why Does EFX Fall Short?

  1. Day-to-day expenses have swelled relative to revenue over the last five years as its adjusted operating margin fell by 6.8 percentage points
  2. Incremental sales over the last two years were less profitable as its 4% annual earnings per share growth lagged its revenue gains
  3. ROIC of 10.6% reflects management’s challenges in identifying attractive investment opportunities, and its shrinking returns suggest its past profit sources are losing steam

Equifax is trading at $275.89 per share, or 34.7x forward P/E. Check out our free in-depth research report to learn more about why EFX doesn’t pass our bar.

ManpowerGroup (MAN)

Market Cap: $2.01 billion

Founded during the post-World War II economic boom when businesses needed temporary workers, ManpowerGroup (NYSE: MAN) connects millions of people to employment opportunities through its global network of staffing, recruitment, and workforce management services.

Why Do We Avoid MAN?

  1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
  2. Projected sales decline of 2.3% over the next 12 months indicates demand will continue deteriorating
  3. Sales were less profitable over the last five years as its earnings per share fell by 19.7% annually, worse than its revenue declines

At $43.34 per share, ManpowerGroup trades at 10.4x forward P/E. Dive into our free research report to see why there are better opportunities than MAN.

Stocks We Like More

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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 176% over the last five years.

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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free.

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