Business services providers use their specialized expertise to help enterprises streamline operations and cut costs. Furthermore, the demand for their offerings is rising as more clients outsource non-core functions, a trend that has enabled the industry to return 16.8% over the past six months. At the same time, the S&P 500 was up 10.9%.
Nevertheless, investors should tread carefully as many companies in this space are cyclical due to their reliance on corporate spending budgets. On that note, here are two resilient services stocks at the top of our wish list and one we would avoid.
One Business Services Stock to Sell:
HP (HPQ)
Market Cap: $25.77 billion
Born from the legendary Silicon Valley garage startup founded by Bill Hewlett and Dave Packard in 1939, HP (NYSE: HPQ) designs and sells personal computers, printers, and related technology products and services to consumers, businesses, and enterprises worldwide.
Why Are We Bearish on HPQ?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 1.2% annually over the last five years
- Sales are projected to remain flat over the next 12 months as demand decelerates from its two-year trend
- Performance over the past two years shows its incremental sales were less profitable as its earnings per share were flat
HP’s stock price of $28.27 implies a valuation ratio of 10.4x forward P/E. Read our free research report to see why you should think twice about including HPQ in your portfolio.
Two Business Services Stocks to Watch:
Stride (LRN)
Market Cap: $3.29 billion
Formerly known as K12, Stride (NYSE: LRN) is an education technology company providing education solutions through digital platforms.
Why Will LRN Beat the Market?
- Annual revenue growth of 11.1% over the last two years was superb and indicates its market share increased during this cycle
- Free cash flow margin grew by 5.8 percentage points over the last five years, giving the company more chips to play with
- Rising returns on capital show management is finding more attractive investment opportunities
At $81.50 per share, Stride trades at 9.5x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Avnet (AVT)
Market Cap: $7.94 billion
With a century-long history of adapting to technological evolution, Avnet (NASDAQ: AVT) is a global electronic components distributor that connects manufacturers of semiconductors and other electronic parts with businesses that need these components.
Why Could AVT Be a Winner?
- 7.8% annual revenue growth over the last two years surpassed the sector average as its services resonated with customers
- Massive revenue base of $27.63 billion makes it a well-known name that influences purchasing decisions
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
Avnet is trading at $97.11 per share, or 9.4x forward P/E. Is now a good time to buy? See for yourself in our comprehensive 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.
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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.
