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2 Services Stocks with Exciting Potential and 1 We Turn Down
Business services providers thrive by solving complex operational challenges for their clients, allowing them to focus on their secret sauce. Market leaders have certainly capitalized on outsourcing trends and digital transformation initiatives to boost sales, helping fuel a 23.2% gain for the industry over the past six months - 8.8 percentage points higher than the S&P 500.
Nevertheless, investors should tread carefully as many companies in this space are cyclical due to their reliance on corporate spending budgets. Keeping that in mind, here are two resilient services stocks at the top of our wish list and one best left ignored.
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 Do We Steer Clear of ICFI?
- Annual sales declines of 4.3% for the past two years show its products and services struggled to connect with the market during this cycle
- Backlog has dropped by 5.7% on average over the past two years, suggesting it’s losing orders as competition picks up
- Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term
ICF International’s stock price of $86.82 implies a valuation ratio of 11.1x forward P/E. If you’re considering ICFI for your portfolio, see our FREE research report to learn more.
Two Business Services Stocks to Watch:
Coherent (COHR)
Market Cap: $59.21 billion
Created through the 2022 rebranding of II-VI Incorporated, a company with roots dating back to 1971, Coherent (NYSE:COHR) develops and manufactures advanced materials, lasers, and optical components for applications ranging from telecommunications to industrial manufacturing.
Why Do We Love COHR?
- Market share has increased this cycle as its 23% annual revenue growth over the last two years was exceptional
- Market share is on track to rise over the next 12 months as its 49.4% projected revenue growth implies demand will accelerate from its two-year trend
- Earnings per share have massively outperformed its peers over the last two years, increasing by 83.7% annually
At $305.40 per share, Coherent trades at 35.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
ePlus (PLUS)
Market Cap: $2.37 billion
Starting as a financing company in 1990 before evolving into a full-service technology provider, ePlus (NASDAQ:PLUS) provides comprehensive IT solutions, professional services, and financing options to help organizations optimize their technology infrastructure and supply chain processes.
Why Are We Fans of PLUS?
- 8.5% annual revenue growth over the last five years surpassed the sector average as its services resonated with customers
- Free cash flow margin increased by 6.3 percentage points over the last five years, giving the company more capital to invest or return to shareholders
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
ePlus is trading at $91.61 per share, or 16.8x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.