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 9.9% gain over the past six months, beating the S&P 500 by 2.2 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. With that said, 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:
EchoStar (SATS)
Market Cap: $35.26 billion
Following its 2023 acquisition of DISH Network, EchoStar (NASDAQ: SATS) provides satellite communications, pay-TV services, wireless networks, and broadband solutions across consumer and enterprise markets.
Why Are We Out on SATS?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 6.6% annually over the last two years
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
- Unprofitable operations could lead to additional rounds of dilutive equity financing if the credit window closes
At $122.95 per share, EchoStar trades at 33.4x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than SATS.
Two Business Services Stocks to Watch:
Copart (CPRT)
Market Cap: $39.99 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 Are We Backing CPRT?
- Annual revenue growth of 15.7% over the last five years was superb and indicates its market share increased during this cycle
- Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 19.3% outpaced its revenue gains
- 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
Copart is trading at $41.29 per share, or 24.5x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
HNI (HNI)
Market Cap: $3.38 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 Does HNI Stand Out?
- Operating margin expanded by 3.9 percentage points over the last five years as it scaled and became more efficient
- Share repurchases over the last two years enabled its annual earnings per share growth of 25.4% to outpace its revenue gains
- Returns on capital are growing as management capitalizes on its market opportunities
HNI’s stock price of $47.54 implies a valuation ratio of 12x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
