Business services providers thrive by solving complex operational challenges for their clients, allowing them to focus on their secret sauce. Market leaders have certainly capitalized on outsourcing trends and digital transformation initiatives to boost sales, helping fuel a 13.8% gain for the industry over the past six months - 6.2 percentage points higher than the S&P 500.
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. On that note, here are two services stocks we think can generate sustainable market-beating returns and one we’re swiping left on.
One Business Services Stock to Sell:
SS&C (SSNC)
Market Cap: $16.31 billion
Founded in 1986 as a bridge between technology and financial services, SS&C Technologies (NASDAQ: SSNC) provides software and software-enabled services that help financial firms and healthcare organizations automate complex business processes.
Why Does SSNC Fall Short?
- Day-to-day expenses have swelled relative to revenue over the last five years as its adjusted operating margin fell by 1.3 percentage points
- Free cash flow margin dropped by 2.3 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- ROIC of 6.8% reflects management’s challenges in identifying attractive investment opportunities
SS&C is trading at $65.65 per share, or 9.3x forward P/E. Read our free research report to see why you should think twice about including SSNC in your portfolio.
Two Business Services Stocks to Watch:
Copart (CPRT)
Market Cap: $28.76 billion
Starting as a single salvage yard in California in 1982, Copart (NASDAQ: CPRT) operates an online auction platform that connects sellers of damaged and salvage vehicles with buyers ranging from dismantlers and rebuilders to used car dealers and exporters.
Why Is CPRT a Good Business?
- Annual revenue growth of 13.4% over the past five years was outstanding, reflecting market share gains this cycle
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its recently improved profitability means it has even more resources to invest or distribute
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
At $29.95 per share, Copart trades at 18.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
RB Global (RBA)
Market Cap: $19.77 billion
Born from the 1958 founding of Ritchie Bros. Auctioneers and rebranded in 2023, RB Global (NYSE: RBA) operates global marketplaces that connect buyers and sellers of commercial assets, vehicles, and equipment across multiple industries.
Why Should RBA Be on Your Watchlist?
- Annual revenue growth of 26.9% over the last five years was superb and indicates its market share increased during this cycle
- Adjusted operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 19.1% annually
RB Global’s stock price of $112.50 implies a valuation ratio of 24.5x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
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 (+1,326% 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.
