Prime 5 Enterprise Providers Shares to Acquire From Sturdy Reopening

August 17, 2021 3:11 am Business Consultancy Poetic Comments

The U.S. economy is experiencing robust economic recovery despite the coronavirus delta chain threat and rising inflation. With most parts of the US economy open again, the corporate services sector should benefit from strong economic growth.

The business services sector includes the consulting, recruiting, financial services, outsourcing, advertising, waste disposal, building maintenance, technology services and auction / valuation services industries. This sector benefited from a higher demand for know-how to improve the operational efficiency of companies and reduce their costs.

Industry looks promising

The battered US labor market, which suffered the hardest during the pandemic era, is showing signs of a gradual recovery. The Department of Labor reported that the number of non-farm workers increased by 943,000 in July, the largest monthly increase since August 2020. In addition, the number of new jobs was revised up by 112,000 in June and May. As more and more jobs are created, recruitment agencies should benefit.

The outlook for advisory services remains positive as companies increasingly seek advice to protect their employees and stay close to their customers and shareholders.

Several large and medium-sized companies are switching from conventional data solutions to technical and domain-specific know-how, data analysis solutions, financial advice and operational advice. This should help corporate service providers win in the future.

In this era of digital transformation, companies are actively looking for a common foundation between on-premise and cloud infrastructures that enables them to provide flexible and easily adaptable hybrid solutions.

The business software industry is benefiting from the robust demand for multi-cloud-enabled software solutions in light of the ongoing transition from legacy platforms to modern cloud-based infrastructure.

The players in the industry are integrating AI and tools such as machine learning into their applications to make them more dynamic and result-oriented. The increased demand for business software that increases productivity and improves decision-making is an important catalyst.

The story goes on

Main catalysts

U.S. companies of all sizes are expanding their business and hiring more to meet robust demand despite rising wages and salaries. Americans have a staggering $ 2 trillion in personal savings. The sky-high savings will allow people to meet their pent-up demands during lockdown, and in turn, force companies to expand their business scope.

The corporate services sector benefits greatly from manufacturing and service activities, which in turn are dependent on economic health. The US economy grew 6.3% and 6.5%, respectively, in the first and second quarters of 2021.

Additionally, U.S. GDP was $ 19.4 trillion in absolute terms in the second quarter of 2021, exceeding $ 19.2 trillion in the fourth quarter of 2019, the last quarter before the global coronavirus outbreak.

The ISM Manufacturing PMI was 59.5% in July, indicating an expansion for the segment as a whole for the 14th consecutive month. In addition, the ISM Services PMI hit an all-time high of 64.1% in July. The service sector accounts for 70% of US GDP, while the manufacturing sector accounts for around 12% of economic activity.

Finally, the business services sector has matured as the demand for services evolves well over time. Revenue, revenue, and cash flows are expected to steadily yield pre-pandemic healthy levels, helping most industry players to distribute stable dividends.

Our top selection

We narrowed our search to five large capitalization corporate services stocks (market capital> $ 10 billion) because these companies generally have an established business model. These stocks have strong growth potential for the remainder of 2021 and have been positively revised in the past 30 days.

Additionally, these stocks outperformed the S&P 500’s market return of 7.9% over the past three months. After all, each of our picks has either a Zacks rank # 1 (strong buy) or 2 (buy). You can see the full list of current Zacks # 1 Rank stocks here.

The following graphic shows the price development of our five picks over the past three months.

Zacks Investment Research

Image source: Zacks Investment Research

Gartner Inc. IT operates as a research and consulting company in the USA, Canada, Europe, the Middle East, Africa and internationally. It operates in three segments: research, conferencing and consulting.

The company provides timely, thought-provoking, and comprehensive analytics that are known for their high quality, independence, and objectivity. His research reports have become indispensable tools for various companies from different industries and strengthen his leading position in the market. It has a large and diverse addressable market with low customer concentration that mitigates operational risks.

This Zacks Rank # 1 company has an expected earnings growth rate of 60.1% for the current year. The Zacks Consensus Estimate for the current year improved 21.4% in the last 30 days. The share price has risen 33.3% over the past three months.

The Interpublic Group of Companies Inc. IPG offers advertising and marketing services worldwide. It operates in two segments, Integrated Agency Networks and IPG DXTRA.

The company continues to recruit, acquire and develop strategic, creative and digital talent from diverse backgrounds to increase organic growth and strengthen its position in international markets. It pursues a disciplined acquisition strategy geared towards high-growth capacities and regions.

This Zacks Rank # 2 company has an expected earnings growth rate of 40.5% for the current year. The Zacks Consensus Estimate for the current year improved 8.5% in the last 30 days. The share price has risen 15.2% over the past three months.

Robert Half International Inc. RHI offers personnel and risk advice in North America, South America, Europe, Asia and Australia. It operates in three segments: temporary work and consultancy staff, permanent positions, as well as risk advice and internal auditing.

Protiviti, the company’s wholly owned subsidiary, through which it provides risk advice, internal auditing and IT advice, is in excellent shape. Protiviti is increasingly focusing on technology consulting, with an additional focus on cloud computing, cybersecurity and digital transformation.

This Zacks Rank # 2 company has an expected earnings growth rate of 81.1% for the current year. The Zacks Consensus Estimate for the current year improved 17.5% in the last 30 days. The share price is up 15.4% in the past three months.

TransUnion TRU offers risk and information solutions. It operates in three segments: US Markets, International, and Consumer Interactive. It has an attractive business model with highly recurring and diversified sources of income, enormous operational leverage, low capital requirements and stable cash flows.

A huge database is the most important asset and perhaps the greatest barrier to entry for competitors. The company serves a wide range of customers in multiple regions and industries.

This Zacks Rank # 2 company has an expected earnings growth rate of 23% for the current year. The Zacks Consensus Estimate for the current year improved 3.1% in the last 30 days. The share price has risen 10.4% over the past three months.

Republic Services Inc. RSG provides nonhazardous solid waste collection, transfer, recycling, disposal, and powering services for small and large containers, municipal, residential, and energy service customers in the United States and Puerto Rico.

The company is focused on increasing its operational efficiencies by moving to collection vehicles for compressed natural gas and converting rear loader trucks to automated side loaders to reduce costs. With the help of long-term contracts for the collection, recycling and disposal of solid waste, it continues to grow internally.

This Zacks Rank # 2 company has an expected earnings growth rate of 13.5% for the current year. The Zacks Consensus Estimate for the current year improved 5.5% in the last 30 days. The share price has risen 9.6% over the past three months.

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