Business services providers play a critical role for enterprises, assisting them with everything from new hardware integrations to consulting and marketing. 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 9% gain has fallen behind the S&P 500’s 10.7% rise.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. Keeping that in mind, here is one services stock boasting a durable advantage and two we’re steering clear of.
Two Business Services Stocks to Sell:
Getty Images (GETY)
Market Cap: $317.6 million
With a vast library of over 562 million visual assets documenting everything from breaking news to iconic historical moments, Getty Images (NYSE:GETY) is a global visual content marketplace that licenses photos, videos, illustrations, and music to businesses, media outlets, and creative professionals.
Why Does GETY Worry Us?
- Annual revenue growth of 3.5% over the last five years was below our standards for the business services sector
- Free cash flow margin shrank by 12.4 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $0.77 per share, Getty Images trades at 5.7x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including GETY in your portfolio.
Connection (CNXN)
Market Cap: $1.82 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 Are We Wary of CNXN?
- Muted 2.5% annual revenue growth over the last two years shows its demand lagged behind its business services peers
- Earnings per share lagged its peers over the last two years as they only grew by 6.9% annually
- Low free cash flow margin of 3.4% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
Connection is trading at $72.34 per share, or 18.5x forward P/E. Dive into our free research report to see why there are better opportunities than CNXN.
One Business Services Stock to Buy:
Cintas (CTAS)
Market Cap: $71.96 billion
Starting as a family business collecting and cleaning shop rags in Cincinnati, Cintas (NASDAQ:CTAS) provides corporate identity uniforms, facility services, and safety products to over one million businesses across North America.
Why Will CTAS Beat the Market?
- Impressive 9.8% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 16.4% exceeded its revenue gains over the last five years
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Cintas’s stock price of $178.85 implies a valuation ratio of 34x 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
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.