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 20.5% gain over the past six months, beating the S&P 500 by 8.8 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. Keeping that in mind, here are two resilient services stocks at the top of our wish list and one we’re steering clear of.
One Business Services Stock to Sell:
Lumen (LUMN)
Market Cap: $6.85 billion
With approximately 350,000 route miles of fiber optic cable spanning North America and the Asia Pacific, Lumen Technologies (NYSE: LUMN) operates a vast fiber optic network that provides communications, cloud connectivity, security, and IT solutions to businesses and consumers.
Why Are We Bearish on LUMN?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 10.2% annually over the last five years
- Adjusted operating profits fell over the last five years as its sales dropped and it struggled to adjust its fixed costs
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
Lumen’s stock price of $6.65 implies a valuation ratio of 5.6x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including LUMN in your portfolio.
Two Business Services Stocks to Watch:
Flex (FLEX)
Market Cap: $44.22 billion
Originally known as Flextronics until its 2016 rebranding, Flex (NASDAQ: FLEX) is a global manufacturing partner that designs, engineers, and builds products for companies across industries from medical devices to solar trackers.
Why Does FLEX Catch Our Eye?
- Dominant market position is represented by its $29.27 billion in revenue and gives it fixed cost leverage when sales grow
- Exciting sales outlook for the upcoming 12 months calls for 25.7% growth, an acceleration from its two-year trend
- Share repurchases over the last two years enabled its annual earnings per share growth of 20.6% to outpace its revenue gains
At $119.73 per share, Flex trades at 23.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Korn Ferry (KFY)
Market Cap: $4.25 billion
With clients including 97% of the S&P 100 and operations in 103 offices across 51 countries, Korn Ferry (NYSE: KFY) is a global consulting firm that helps organizations design optimal structures, recruit talent, develop leaders, and create effective compensation strategies.
Why Could KFY Be a Winner?
- Market share has increased this cycle as its 10.1% annual revenue growth over the last five years was exceptional
- Earnings per share grew by 26.9% annually over the last two years and trumped its peers
- ROIC punches in at 19%, illustrating management’s expertise in identifying profitable investments
Korn Ferry is trading at $83.65 per share, or 14.5x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 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-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
