Business services providers thrive by solving complex operational challenges for their clients, allowing them to focus on their secret sauce. These firms have helped their customers unlock huge efficiencies, so it’s no surprise the industry has posted a 21% gain over the past six months, beating the S&P 500 by 4.1 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. Taking that into account, here are two services stocks boasting durable advantages and one we’re steering clear of.
One Business Services Stock to Sell:
Ziff Davis (ZD)
Market Cap: $1.94 billion
Originally a pioneering technology publisher founded in 1927 that became famous for PC Magazine, Ziff Davis (NASDAQ: ZD) operates a portfolio of digital media brands and subscription services across technology, shopping, gaming, healthcare, and cybersecurity markets.
Why Do We Think ZD Will Underperform?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
- Day-to-day expenses have swelled relative to revenue over the last five years as its adjusted operating margin fell by 5.7 percentage points
- Earnings per share have contracted by 9% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
At $56.41 per share, Ziff Davis trades at 10.4x forward P/E. If you’re considering ZD for your portfolio, see our FREE research report to learn more.
Two Business Services Stocks to Buy:
ADP (ADP)
Market Cap: $104.5 billion
Processing one out of every six paychecks in the United States, ADP (NASDAQ: ADP) provides cloud-based human capital management solutions that help businesses manage payroll, benefits, talent acquisition, and HR administration.
Why Is ADP a Top Pick?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 7.9% annual sales growth over the last five years
- Massive revenue base of $21.95 billion makes it a well-known name that influences purchasing decisions
- Strong free cash flow margin of 21.7% enables it to reinvest or return capital consistently, and its rising cash conversion increases its margin of safety
ADP’s stock price of $261.95 implies a valuation ratio of 21.5x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
HNI (HNI)
Market Cap: $3.37 billion
With roots dating back to 1944 and a significant acquisition of Kimball International in 2023, HNI (NYSE: HNI) manufactures and sells office furniture systems, seating, and storage solutions, as well as residential fireplaces and heating products.
Why Is HNI a Good Business?
- Market share has increased this cycle as its 29.9% annual revenue growth over the last two years was exceptional
- Exciting sales outlook for the upcoming 12 months calls for 40.2% growth, an acceleration from its two-year trend
- Earnings growth has easily exceeded the peer group average over the last five years as its EPS has compounded at 10.7% annually
HNI is trading at $46.68 per share, or 10.7x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth 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 Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
