Business services providers use their specialized expertise to help enterprises streamline operations and cut costs. Market leaders have certainly capitalized on outsourcing trends and digital transformation initiatives to boost sales, helping fuel a 7% gain for the industry over the past six months. This performance has closely followed 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 services stocks boasting durable advantages and one we’re swiping left on.
One Business Services Stock to Sell:
ePlus (PLUS)
Market Cap: $2.27 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 Does PLUS Give Us Pause?
- Muted 4.4% annual revenue growth over the last two years shows its demand lagged behind its business services peers
- Incremental sales over the last two years were less profitable as its earnings per share were flat while its revenue grew
- Poor free cash flow margin of 3.5% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
ePlus’s stock price of $86.75 implies a valuation ratio of 16x forward P/E. To fully understand why you should be careful with PLUS, check out our full research report (it’s free).
Two Business Services Stocks to Watch:
Booz Allen Hamilton (BAH)
Market Cap: $9.27 billion
With roots dating back to 1914 and deep ties to nearly all U.S. cabinet-level departments, Booz Allen Hamilton (NYSE: BAH) provides management consulting, technology services, and cybersecurity solutions primarily to U.S. government agencies and military branches.
Why Does BAH Stand Out?
- Annual revenue growth of 7.8% over the last five years beat the sector average and underscores the unique value of its offerings
- Large revenue base of $11.41 billion and strong customer awareness give it distribution advantages
- Improving returns on capital reflect management’s ability to monetize investments
At $77.86 per share, Booz Allen Hamilton trades at 12.7x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
TD SYNNEX (SNX)
Market Cap: $18.69 billion
Serving as the crucial middleman in the technology supply chain, TD SYNNEX (NYSE: SNX) is a global technology distributor that connects thousands of IT manufacturers with resellers, helping businesses access hardware, software, and technology solutions.
Why Could SNX Be a Winner?
- Market share has increased this cycle as its 25.6% annual revenue growth over the last five years was exceptional
- Unparalleled revenue scale of $65.14 billion gives it an edge in distribution
- Share repurchases have increased shareholder returns as its annual earnings per share growth of 15.6% exceeded its revenue gains over the last two years
TD SYNNEX is trading at $233.27 per share, or 14.1x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
