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 We’re Skeptical Of

CTS 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 2.8%. This drawdown was disheartening since the S&P 500 gained 5.4%.

While some companies have durable competitive advantages that enable them to grow in any landscape, the odds aren’t great for the ones we’re analyzing today. On that note, here are three services stocks that may face trouble.

CTS (CTS)

Market Cap: $1.22 billion

With roots dating back to 1896 and a global manufacturing footprint, CTS (NYSE: CTS) designs and manufactures sensors, connectivity components, and actuators for aerospace, defense, industrial, medical, and transportation markets.

Why Do We Think Twice About CTS?

  1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 5.7% annually over the last two years
  2. Smaller revenue base of $520.9 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
  3. Earnings per share have dipped by 4.5% annually over the past two years, which is concerning because stock prices follow EPS over the long term

CTS’s stock price of $41.40 implies a valuation ratio of 17.3x forward P/E. Dive into our free research report to see why there are better opportunities than CTS.

Steelcase (SCS)

Market Cap: $1.86 billion

Founded in 1912 when metal office furniture was replacing wooden alternatives, Steelcase (NYSE: SCS) is a global office furniture manufacturer that designs and produces workplace solutions including desks, chairs, architectural products, and services.

Why Should You Dump SCS?

  1. Sales stagnated over the last five years and signal the need for new growth strategies
  2. Flat earnings per share over the last five years lagged its peers
  3. Underwhelming 7.1% return on capital reflects management’s difficulties in finding profitable growth opportunities

Steelcase is trading at $16.18 per share, or 14.7x forward P/E. To fully understand why you should be careful with SCS, check out our full research report (it’s free).

Knowles (KN)

Market Cap: $1.77 billion

With roots dating back to 1946 and a focus on components that must perform flawlessly in critical situations, Knowles (NYSE: KN) designs and manufactures specialized electronic components like high-performance capacitors, microphones, and speakers for medical technology, defense, and industrial applications.

Why Are We Out on KN?

  1. Sales tumbled by 5.3% annually over the last five years, showing market trends are working against its favor during this cycle
  2. Revenue base of $563.1 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
  3. Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its falling returns suggest its earlier profit pools are drying up

At $20.58 per share, Knowles trades at 17x forward P/E. Dive into our free research report to see why there are better opportunities than KN.

Stocks We Like More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Strong Momentum 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-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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