Business services providers use their specialized expertise to help enterprises streamline operations and cut costs. Furthermore, the demand for their offerings is rising as more clients outsource non-core functions, a trend that has enabled the industry to return 27.2% over the past six months. At the same time, the S&P 500 was up 21.4%.
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. Taking that into account, here are two services stocks boasting durable advantages and one that may face trouble.
One Business Services Stock to Sell:
Sinclair (SBGI)
Market Cap: $924.2 million
With over 2,400 hours of local news produced weekly and 640 broadcast channels reaching millions of American homes, Sinclair (NASDAQ: SBGI) operates a network of 185 local television stations across 86 U.S. markets, producing news programming and distributing content from major networks.
Why Are We Bearish on SBGI?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 12% annually over the last five years
- Eroding returns on capital suggest its historical profit centers are aging
- 7× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Sinclair is trading at $12.79 per share, or 6.7x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why SBGI doesn’t pass our bar.
Two Business Services Stocks to Watch:
Tetra Tech (TTEK)
Market Cap: $8.68 billion
With a 50-year legacy of "Leading with Science" and operations on all seven continents, Tetra Tech (NASDAQ: TTEK) provides high-end consulting and engineering services focused on water management, environmental solutions, and sustainable infrastructure for government and commercial clients worldwide.
Why Does TTEK Catch Our Eye?
- Annual revenue growth of 12.4% over the past five years was outstanding, reflecting market share gains this cycle
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 24.1% exceeded its revenue gains over the last two years
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
At $33.92 per share, Tetra Tech trades at 19.9x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Crane NXT (CXT)
Market Cap: $2.75 billion
Born from a corporate transformation completed in 2023, Crane NXT (NYSE: CXT) provides specialized technology solutions for payment processing, banknote security, and authentication systems for financial institutions and businesses.
Why Does CXT Stand Out?
- Backlog has averaged 17.1% growth over the past two years, showing it has a pipeline of unfulfilled orders that will support revenue in the future
- Estimated revenue growth of 10.2% for the next 12 months implies its momentum over the last two years will continue
- Management team has demonstrated it can invest in profitable ventures through its 12.6% five-year return on capital
Crane NXT’s stock price of $47.72 implies a valuation ratio of 10.4x 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.
