Business services providers use their specialized expertise to help enterprises streamline operations and cut costs. 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.
Although these companies have produced results, only a handful will thrive over the long term as AI-driven upstarts are rapidly taking share from the incumbents. Keeping that in mind, here are two resilient services stocks at the top of our wish list and one we would avoid.
One Business Services Stock to Sell:
Connection (CNXN)
Market Cap: $2.08 billion
Starting as a small computer products seller in 1982 and evolving into a Fortune 1000 company, Connection (NASDAQ:CNXN) is a technology solutions provider that helps businesses and government agencies design, purchase, implement, and manage their IT infrastructure and systems.
Why Does CNXN Give Us Pause?
- Muted 2.3% annual revenue growth over the last five years shows its demand lagged behind its business services peers
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 8.4% annually
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
At $82.30 per share, Connection trades at 19.4x forward P/E. To fully understand why you should be careful with CNXN, check out our full research report (it’s free).
Two Business Services Stocks to Watch:
Napco (NSSC)
Market Cap: $1.43 billion
Protecting everything from schools to government facilities since 1969, Napco Security Technologies (NASDAQ:NSSC) manufactures electronic security devices, access control systems, and communication services for intrusion and fire alarm systems.
Why Will NSSC Beat the Market?
- Market share has increased this cycle as its 14.2% annual revenue growth over the last five years was exceptional
- Robust free cash flow margin of 19.8% gives it many options for capital deployment, and its improved cash conversion implies it’s becoming a less capital-intensive business
- Returns on capital are climbing as management makes more lucrative bets
Napco is trading at $39.98 per share, or 26.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Genpact (G)
Market Cap: $5.74 billion
Originally spun off from General Electric in 2005 to provide business process services, Genpact (NYSE:G) is a global professional services firm that helps businesses transform their operations through digital technology, AI, and data analytics solutions.
Why Do We Like G?
- Share repurchases over the last five years enabled its annual earnings per share growth of 11.1% to outpace its revenue gains
- G is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its rising cash conversion increases its margin of safety
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures, and its returns are growing as it capitalizes on even better market opportunities
Genpact’s stock price of $34.15 implies a valuation ratio of 8x forward P/E. Is now the time to initiate a position? See for yourself in our full 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 Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.