Wall Street has been reeling under volatility since mid-June, following the second wave of coronavirus in more than 20 U.S. states. New cases of COVID-19 jumped as all 50 states started reopening after nearly two months of lockdowns. The resurgence of the deadly virus has raised several questions about the much-hyped, V-shaped recovery of the U.S. economy.
Despite the resurgence of coronavirus, several business service stocks have skyrocketed in the past three months. A handful of them carries a favorable Zacks Rank.
Sector Looks Promising
The business services sector comprises consulting, staffing, financial tractions, outsourcing, advertising, waste removal, building maintenance, technology services and auction/valuation services industries. This sector benefited from a higher demand for expertise to improve operational efficiency and reduce costs.
U.S.states eased restrictions and started to open up their economies in the last week of May. This favored the sector following nearly two months of lockdowns. Although, some states were again forced to close some parts of their economy due to the second wave of COVID-19, a second round of full lockdown is not going to take place. In the past three months, the overall sector grew 15.1%.
Technology services industry’s growth has accelerated on an increasing number of remote workers in the wake of the coronavirus-induced work-from-home wave. Further, an increasing number of mobile workers, courtesy of the ongoing workspace trend of Bring Your Own Device, has been benefiting the space.
In this era of digital transformation, enterprises are actively seeking a common ground between on-premise and cloud infrastructures that will enable them to provide flexible and easily adoptable hybrid solutions.
Moreover, the consulting services outlook remains bright as organizations are increasingly seeking consultation in a bid to protect employees, and stay close to their customers and shareholders.
Several large and mid-sized companies are shifting from conventional data solutions to technical and domain-specific expertise, data analytics solutions, financial consultancy and operational consultancy services. This should help business service providers gain going forward.
Additionally, the business software industry is benefiting from robust demand for multi cloud-enabled software solutions, given the ongoing transition from legacy platforms to modern cloud-based infrastructure.
The industry players are incorporating artificial intelligence and tools like machine learning in their applications to make the same more dynamic and result-oriented. Elevated demand for enterprise software, which is ramping up productivity and improving decision-making process, is a key catalyst.
Our Top Picks
We have narrowed down our search to five business services stocks that have strong growth potential, robust earnings estimates revision and rallied more than 20% in the past three months. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past three months.
CoreLogic Inc. CLGX is a leading provider of consumer, financial and property information, analytics and services to business and government.
The Zacks Rank #1 company has an expected earnings growth rate of 12.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 7.1% over the last 7 days. The stock has soared 78.9% in the past three months.
SPS Commerce Inc. SPSC is a provider of on-demand supply chain management solutions servicing its customers worldwide.
The Zacks Rank #1 company has expected earnings growth of 7.8% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.7% over the last 7 days. The stock has jumped 52% in the past three months.
FactSet Research Systems Inc. FDS provides integrated financial information and analytical applications to the investment and corporate communities in the United States, Europe and the Asia Pacific.
The Zacks Rank #1 company has an expected earnings growth rate of 5.2% for the current year (ending August 2020). The Zacks Consensus Estimate for current-year earnings has improved by 5.2% over the last 30 days. The stock has rallied 25.8% in the past three months.
Yext Inc. YEXT is engaged in delivering brand-verified answers that puts businesses in control of their facts online. Its Yext platform lets businesses structure the facts about their brands in a database called a Knowledge Graph.
The Zacks Rank #2 company has an expected earnings growth rate of 8.3% for the current year (ending January 2021). The Zacks Consensus Estimate for current-year earnings has improved by 2.3% over the last 30 days. The stock has climbed 45.6% in the past three months.
TTEC Holdings Inc. TTEC is focused on the design, implementation, and delivery of transformative customer experience for various brands. It operates through TTEC Digital and TTEC Engage segments.
The Zacks Rank #2 company has an expected earnings growth rate of 7.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 1.5% over the last 30 days. The stock has surged 24.4% in the past three months.
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TeleTech Holdings, Inc. (TTEC) : Free Stock Analysis Report
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