5 Stocks to Buy Amid Growing Strength in the Business Services Sector

Zacks Investment Research highlights the strength of the U.S. Business Services Sector, noting revenues, income, and cash flows are above pre-pandemic levels and predicting outperformance over the next three to six months. They recommend five stocks with a Zacks Rank #2 (Buy) that have provided double-digit returns in the past three months: Duolingo (DUOL), Cintas (CTAS), Stantec (STN), Thomson Reuters (TRI), and FirstCash Holdings (FCFS); each are expected to have revenue and earnings growth this year.

Analysis

The U.S. Business Services Sector is demonstrating robust health, supported by strong domestic economic fundamentals, with key financial metrics such as revenues, income, and cash flows now surpassing pre-pandemic levels. The sector's favorable positioning is underscored by its ranking in the top 25% of the Zacks Sector Rank, leading to an expectation of market outperformance over the next three to six months. Within this promising sector, five specific companies have been identified with a Zacks Rank #2 (Buy) and have delivered double-digit returns in the past three months. Duolingo (DUOL), a mobile learning platform, projects significant growth with expected revenue and earnings increases of 33.4% and 55.3% respectively for the current year, and its consensus earnings estimate has risen 10.2% in the last 60 days. Cintas Corp. (CTAS) is benefiting from momentum across its segments, including Uniform Rental and Facility Services, and First Aid and Safety Services, with technology investments and acquisitions like Paris Uniform and SITEX further bolstering optimism; CTAS anticipates 7% revenue growth and 10.8% earnings growth for its current fiscal year (ending May 2026), with a 1.9% improvement in its current-year earnings consensus estimate over 60 days. Stantec Inc. (STN), providing professional consulting services, forecasts 11.1% revenue growth and 19.5% earnings growth for the current year, supported by a 3.2% increase in its current-year earnings consensus estimate in the past 30 days. Thomson Reuters Corp. (TRI), a content and technology provider, expects revenue and earnings growth of 3.2% and 4.2% respectively for the current year, with its earnings consensus estimate up 1.3% over 60 days. FirstCash Holdings Inc. (FCFS), operating pawn stores and retail POS payment solutions, anticipates a slight revenue decline of -0.2% but strong earnings growth of 17.3% for the current year, with its earnings consensus estimate improving by 2.7% over the last 60 days.

Key Decisions for Investors

• Investors should consider the U.S. Business Services Sector for potential outperformance, given its strong fundamentals and positive Zacks Sector Rank.
• The five highlighted stocks (DUOL, CTAS, STN, TRI, FCFS) warrant attention due to their Zacks Rank #2 (Buy), recent strong performance, and positive earnings estimate revisions, though individual growth profiles and specific catalysts for each company should be evaluated.
• Particular focus could be placed on companies demonstrating substantial earnings growth expectations and upward revisions in consensus estimates, such as Duolingo and Stantec, while also noting FirstCash Holdings' strong earnings growth despite a flat revenue forecast.
• Monitor the continued economic strength and sector-specific trends that support the business services industry's positive outlook over the projected three to six-month period.