Business services providers play a critical role for enterprises, assisting them with everything from new hardware integrations to consulting and marketing. These firms have helped their customers unlock huge efficiencies, so it’s no surprise the industry has posted a 17.8% gain over the past six months, beating the S&P 500 by 6.7 percentage points.
Regardless of these results, investors must exercise caution as many companies in this space are sensitive to the ebbs and flows of the broader economy. With that said, here are two services stocks we think can generate sustainable market-beating returns and one best left ignored.
One Business Services Stock to Sell:
Alight (ALIT)
Market Cap: $399.5 million
Born from a corporate spinoff in 2017 to focus on employee experience technology, Alight (NYSE: ALIT) provides human capital management solutions that help companies administer employee benefits, payroll, and workforce management systems.
Why Are We Out on ALIT?
- Annual sales declines of 4.1% for the past five years show its products and services struggled to connect with the market during this cycle
- Earnings per share have contracted by 7.3% annually over the last four years, a headwind for returns as stock prices often echo long-term EPS performance
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Alight is trading at $15.13 per share, or 3.3x forward P/E. If you’re considering ALIT for your portfolio, see our FREE research report to learn more.
Two Business Services Stocks to Watch:
NetApp (NTAP)
Market Cap: $37.19 billion
Founded in 1992 as a pioneer in networked storage technology, NetApp (NASDAQ: NTAP) provides data storage and management solutions that help organizations store, protect, and optimize their data across on-premises data centers and public clouds.
Why Does NTAP Catch Our Eye?
- Billings growth has averaged 7.3% over the past two years, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Share repurchases over the last five years enabled its annual earnings per share growth of 15% to outpace its revenue gains
- NTAP is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its improved cash conversion implies it’s becoming a less capital-intensive business
NetApp’s stock price of $189.21 implies a valuation ratio of 21.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Brown & Brown (BRO)
Market Cap: $23.9 billion
With roots dating back to 1939 and operations spanning 44 U.S. states and 14 countries, Brown & Brown (NYSE: BRO) is an insurance brokerage and risk management firm that markets and sells insurance products across property, casualty, and employee benefits sectors.
Why Will BRO Beat the Market?
- Market share has increased this cycle as its 22.4% annual revenue growth over the last two years was exceptional
- Earnings per share grew by 16.9% annually over the last five years and trumped its peers
- Strong free cash flow margin of 22.7% enables it to reinvest or return capital consistently
At $71.07 per share, Brown & Brown trades at 15.4x forward P/E. 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
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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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-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
