1 Services Stock Worth Investigating and 2 Facing Headwinds

Business services providers thrive by solving complex operational challenges for their clients, allowing them to focus on their secret sauce. But increasing competition from AI-driven upstarts has tempered enthusiasm, and over the past six months, the industry has pulled back by 4.9%. This drawdown was disheartening since the S&P 500 gained 3.7%.

Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. Taking that into account, here is one services stock boasting a durable advantage and two best left ignored.

Two Business ServicesStocks to Sell:

Benchmark (BHE)

Market Cap: $1.44 billion

Operating as a critical behind-the-scenes partner for complex technology products since 1979, Benchmark Electronics (NYSE:BHE) provides advanced manufacturing, engineering, and technology solutions for original equipment manufacturers across aerospace, medical, industrial, and technology sectors.

Why Is BHE Not Exciting?

1. Annual sales declines of 5.8% for the past two years show its products and services struggled to connect with the market during this cycle
2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 1% for the last five years
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

Benchmark is trading at $39.84 per share, or 15.4x forward P/E. If you’re considering BHE for your portfolio, see our FREE research report to learn more.

Lumen (LUMN)

Market Cap: $4.42 billion

With approximately 350,000 route miles of fiber optic cable spanning North America and the Asia Pacific, Lumen Technologies (NYSE:LUMN) operates a vast fiber optic network that provides communications, cloud connectivity, security, and IT solutions to businesses and consumers.

Why Should You Sell LUMN?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 9.4% annually over the last five years
2. Free cash flow margin dropped by 7.5 percentage points over the last five years, implying the company became more capital intensive as competition picked up
3. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned

Lumen’s stock price of $4.32 implies a valuation ratio of 1.3x forward EV-to-EBITDA. To fully understand why you should be careful with LUMN, check out our full research report (it’s free).

One Business Services Stock to Watch:

RB Global (RBA)

Market Cap: $19.98 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 Could RBA Be a Winner?

1. Impressive 52.9% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Adjusted operating margin profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
3. Earnings growth has trumped its peers over the last five years as its EPS has compounded at 23.7% annually

At $107.91 per share, RB Global trades at 28.7x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

Trump’s April 2024 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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