Business services providers use their specialized expertise to help enterprises streamline operations and cut costs. Still, investors are uneasy as firms face challenges from AI-driven disruptors and tightening corporate budgets. These doubts have certainly contributed to services stocks’ recent underperformance - over the past six months, the industry’s 8% gain has fallen behind the S&P 500’s 10.8% rise.
Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. Keeping that in mind, here are two resilient services stocks at the top of our wish list and one we’re passing on.
One Business Services Stock to Sell:
ScanSource (SCSC)
Market Cap: $1.11 billion
Operating as a crucial link in the technology supply chain since 1992, ScanSource (NASDAQ:SCSC) is a hybrid distributor that connects hardware, software, and cloud services from technology suppliers to resellers and business customers.
Why Are We Hesitant About SCSC?
- Sales tumbled by 4.9% annually over the last two years, showing market trends are working against it during this cycle
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 2.4%
- Poor free cash flow margin of 3.4% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
At $54.86 per share, ScanSource trades at 12.6x forward P/E. Check out our free in-depth research report to learn more about why SCSC doesn’t pass our bar.
Two Business Services Stocks to Watch:
TransUnion (TRU)
Market Cap: $15.4 billion
One of the three major credit bureaus in the United States alongside Equifax and Experian, TransUnion (NYSE:TRU) is a global information and insights company that provides credit reports, fraud prevention tools, and data analytics to help businesses make decisions and consumers manage their financial health.
Why Are We Positive on TRU?
- Impressive 11.6% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Projected revenue growth of 11.4% for the next 12 months suggests its momentum from the last two years will persist
- Strong free cash flow margin of 10.1% enables it to reinvest or return capital consistently, and its recently improved profitability means it has even more resources to invest or distribute
TransUnion is trading at $79.84 per share, or 16.4x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Motorola Solutions (MSI)
Market Cap: $68.61 billion
Born from the company that invented the first portable handheld police radio in 1940, Motorola Solutions (NYSE:MSI) provides mission-critical communications, video security, and command center software solutions for public safety agencies and enterprise customers.
Why Will MSI Beat the Market?
- Impressive 9.5% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Adjusted operating margin expanded by 5.3 percentage points over the last five years as it scaled and became more efficient
- Robust free cash flow margin of 19.2% gives it many options for capital deployment, and its rising cash conversion increases its margin of safety
Motorola Solutions’s stock price of $410.71 implies a valuation ratio of 24x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating 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-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.