The business services industry is a major beneficiary of service activities. Economic activity in the services sector expanded for the 10th consecutive month in April, with the Services PMI measured by the Institute for Supply Management remaining robust, staying above the 50% threshold for the 56th time in 59 months, indicating sustained expansion since the post-pandemic recovery.

The rapid advancement and adoption of artificial intelligence and automation technologies are reshaping how business services are delivered. While these innovations promise enhanced efficiency, cost reduction, and faster turnaround times, they also pose challenges such as workforce displacement and the need for constant upskilling. Companies that effectively integrate AI while managing the human impact will likely lead the future of the industry.

The industry is mature, with demand for services remaining stable for some time now. Revenues, income, and cash flows are now above pre-pandemic levels. The Zacks-defined Business Services industry is currently in the top 19% of the Zacks Sector Rank. Since the business services industry is ranked in the top half of the Zacks Ranked Industries, we expect it to outperform the market over the next three to six months.

Here we recommend five business services stocks with a favorable Zacks Rank for investment. These stocks are: Cintas Corp. CTAS, Thomson Reuters Corp. TRI, Healthcare Services Group Inc. HCSG, ZipRecruiter Inc. ZIP and Bright Horizons Family Solutions Inc. BFAM. Each of our picks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The chart below shows the price performance of our five picks in the past month.Zacks Investment Research

Image Source: Zacks Investment Research

Cintas Corp.

Cintas is well-positioned to benefit from the solid momentum across its segments. Penetration of additional products and services into existing customers is aiding the Uniform Rental and Facility Services segment. Improved demand for AED Rentals and WaterBreak products is driving the First Aid and Safety Services segment.

CTAS’ investments in technology and automation hold promise. The successive acquisitions of Paris Uniform and SITEX sparked optimism in the stock. Also, handsome rewards to its shareholders add to CTAS’ appeal.

CTAS has an expected revenue and earnings growth rate of 7% and 10.8%, respectively, for the next year (ending May 2026). The Zacks Consensus Estimate for next-year earnings has improved 1.7% in the past 60 days.

Thomson Reuters Corp.

Thomson Reuters operates as a content and technology company in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. TRI operates through five segments: Legal Professionals, Corporates, Tax and Accounting Professionals, Reuters News, and Global Print.

Story Continues

TRI is a leading provider of value-added information and technology to users in the fields of law, tax, accounting, financial services, higher education, reference information, corporate training and assessment, scientific research and healthcare.

TRI has an expected revenue and earnings growth rate of 3.1% and 4.2%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.3% in the past 30 days.

Healthcare Services Group Inc.

Healthcare Services Group provides management, administrative, and operating services to the housekeeping, laundry, linen, facility maintenance, and dietary service departments of nursing homes, retirement complexes, rehabilitation centers, and hospitals in the United States. HCSG operates through two segments, Housekeeping and Dietary.

HCSG has the experience and expertise to meet these needs, making it the preferred choice for hospital and senior living clients nationwide. HCSG also provides professional management of ancillary services to a diverse mix of satisfied clients.

HCSG has an expected revenue and earnings growth rate of 5.1% and 58.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5% in the past seven days.

ZipRecruiter Inc.

ZipRecruiter operates an online marketplace that connects job seekers and employers in the United States and internationally. ZIP’s two-sided marketplace enables employers to post jobs and access other features, as well as job seekers that apply to jobs with a single click. ZIP offers recruiting, hiring, job boards, posting, web application, candidate screening, applicant tracking and job alerts services.

ZIP has an expected revenue and earnings growth rate of 9% and 13%, respectively, for the next year. The Zacks Consensus Estimate for next-year earnings has improved 3.8% in the past 30 days.

Bright Horizons Family Solutions Inc.

Bright Horizons Family Solutions is engaged in providing employer-sponsored child care, early education and work/life solutions. BFAM operates primarily in North America, Europe and India.

BFAM’s employer-sponsored child care programs include child care and early education centers, infant/toddler/preschool care and education, full and part-time child care, kindergarten, school-age programs, summer camps and back-up care. Bright Horizons manages child care centers for corporations, hospitals, universities and government agencies.

BFAM has an expected revenue and earnings growth rate of 7.6% and 18.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 24.6% in the past 30 days.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Cintas Corporation (CTAS):Free Stock Analysis Report

Thomson Reuters Corp (TRI):Free Stock Analysis Report

ZipRecruiter, Inc. (ZIP):Free Stock Analysis Report

Healthcare Services Group, Inc. (HCSG):Free Stock Analysis Report

Bright Horizons Family Solutions Inc. (BFAM):Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

View Comments