Resources Connection, Inc. (RGP): Among the Best Consulting Stocks to Buy According to Hedge Funds

We recently compiled a list of the 12 Best Consulting Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Resources Connection, Inc. (NASDAQ:RGP) stands against the other consulting stocks.

Consulting stocks are shares of publicly traded firms that assist businesses and other organizations by providing advice and expertise.

Despite geopolitical turmoil, economic turbulence, and a flurry of technology breakthroughs affecting business in all sectors in recent years, the consulting industry’s market size has consistently grown. It shows no indications of slowing in 2025.

According to a study report issued by Spherical Insights & Consulting, the global consulting services market was valued at $327.65 billion in 2023 and is expected to reach $494.36 billion by 2033. Regionally, North America is anticipated to have the highest share of the global consulting service market during the forecast period. On the other hand, Asia-Pacific is projected to develop at the quickest rate in the global consulting service market during the forecast period.

According to SPI Research’s Professional Services Maturity Benchmark Report, despite economic volatility, management consultants’ revenue rose by 9% in 2023 YoY, driven mainly by AI, technology, and sustainability services. While global professional services growth slowed to 7.8%, management consulting outperformed the trend.

“The move to implement artificial intelligence in every industry was a key factor driving growth,” SPI stated, citing cloud, cybersecurity, robotics, and business process digitization as significant demand areas. Fee increases helped to offset inflation, with the average billable revenue per consultant climbing to $212,000. Acquisitions also had a role, with individual transactions raising revenue by 8% on average.

Positive signals are emerging from the management consulting industry, with several prominent firms expressing confidence in the market and business prospects for the coming year. Henrik Ringgaard Pedersen, head of Nordic at PA Consulting, believes that resilience advisory, AI integration, and private equity involvement will influence the consulting sector in 2025. He underlines the growing demand for resilience consulting, particularly in financial services, with a heavy emphasis on cybersecurity and IT security. He observes a shift in client expectations, which requires consultants to give specialized expertise rather than generic solutions.

Artificial intelligence remains a top priority, but companies must assist clients in setting reasonable expectations. Pedersen stated the following in this regard:

“We’ve moved from hype to reality, and now it’s about carefully considering how and to what extent AI should be used. The industry will prioritize strategic AI adoption over chasing trends.”

Another trend is rising private equity interest in consulting firms, with potential acquisitions on the horizon. Pedersen sees this as a possible opportunity, noting that some businesses are also looking into new structures to stay relevant. “Securing capital from private equity funds or even being acquired is undoubtedly a growth opportunity,” he commented. In 2021, PA Consulting itself changed ownership from the Carlyle Group to Jacobs, showing the growing internationalization of the consulting industry.

Methodology:

We sifted through holdings of consulting services ETFs and online rankings to form an initial list of 20 Consulting stocks. From the resultant dataset, we chose the top 12 stocks most favored by hedge funds, using Insider Monkey’s database of 1,009 hedge funds in Q4 2024 to gauge hedge fund sentiment for stocks. We have used the stock’s Revenue Growth Rate (year-over-year) as a tie-breaker in case two or more stocks have the same number of hedge funds invested.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Resources Connection, Inc. (NASDAQ:RGP)

Number of Hedge Fund Investors: 20

One of the Best Consulting Stocks, Resources Connection, Inc. (NASDAQ:RGP), primarily provides consultancy and business initiative support services through its operating subsidiary, Resources Global Professionals. There are two segments: Resources Global Professionals (RGP) and Sitrick. The RGP category focuses on providing consulting services that address its clients’ operational needs and transformation objectives by combining bench and on-demand talent. The Sitrick division offers corporate, financial, transactional, and crisis communication and management solutions. The majority of the company’s revenue comes from the RGP division. Geographically, it draws most of its revenue from North America, with the remainder coming from Europe and the Asia Pacific region.

Resources Connection, Inc. (NASDAQ:RGP) is successfully implementing its plan, resulting in sequential revenue growth, increased gross margins, and improved adjusted EBITDA. Stronger cross-selling, higher bill rates, and improved utilization all contributed to the Consulting segment’s growth. The business is in a strong position to grow in the upcoming year because of improved operational efficiency and a stabilized demand environment.

Revenue in the Consulting category climbed by $1.6 million, or 2.7%, to $60.6 million in the second quarter of fiscal 2025, from $59.1 million in the second quarter of fiscal 2024. The growth was principally driven by a 6.2% (also 6.2% on a constant currency basis) increase in the average bill rate, which was essentially the result of the company’s value pricing strategy.

Overall, RGP ranks 8th on our list of the Best Consulting Stocks to Buy According to Hedge Funds. While we acknowledge the potential for RGP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RGP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stock To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.