Business services providers use their specialized expertise to help enterprises streamline operations and cut costs. Market leaders have certainly capitalized on outsourcing trends and digital transformation initiatives to boost sales, helping fuel a 22.5% gain for the industry over the past six months - 6.3 percentage points higher than the S&P 500.
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. Taking that into account, 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:
WEBTOON (WBTN)
Market Cap: $1.47 billion
Pioneering a vertical-scrolling format optimized for mobile devices, WEBTOON Entertainment (NASDAQ: WBTN) operates a global platform where creators publish serialized web-comics and web-novels that users can read in bite-sized episodes.
Why Does WBTN Worry Us?
- 2.6% annual revenue growth over the last two years was slower than its business services peers
- Earnings per share have contracted by 78.9% annually over the last one years, a headwind for returns as stock prices often echo long-term EPS performance
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
WEBTOON is trading at $11.00 per share, or 113.6x forward P/E. If you’re considering WBTN for your portfolio, see our FREE research report to learn more.
Two Business Services Stocks to Watch:
Genpact (G)
Market Cap: $5.83 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 Does G Stand Out?
- Performance over the past five years was boosted by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its returns are growing as it capitalizes on even better market opportunities
At $34.94 per share, Genpact trades at 7.6x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Arthur J. Gallagher (AJG)
Market Cap: $59.42 billion
Founded in 1927 and operating in approximately 130 countries through direct operations and correspondent networks, Arthur J. Gallagher (NYSE: AJG) provides insurance brokerage, reinsurance, consulting, and third-party claims settlement services to businesses and individuals worldwide.
Why Do We Love AJG?
- Annual revenue growth of 20% over the last two years was superb and indicates its market share increased during this cycle
- Earnings per share grew by 18.5% annually over the last five years, massively outpacing its peers
- AJG is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Arthur J. Gallagher’s stock price of $231.96 implies a valuation ratio of 16.3x forward P/E. Is now a good 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-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
