2 Services Stocks to Consider Right Now and 1 We Question

Barchart·06/05/2026 04:08:23

Business services providers play a critical role for enterprises, assisting them with everything from new hardware integrations to consulting and marketing. Furthermore, the demand for their offerings is rising as more clients outsource non-core functions, a trend that has enabled the industry to return 13.2% over the past six months. At the same time, the S&P 500 was up 10%.

Although these companies have produced results, only a handful will thrive over the long term as AI-driven upstarts are rapidly taking share from the incumbents. Taking that into account, here are two resilient services stocks at the top of our wish list and one we’re swiping left on.

One Business Services Stock to Sell:

FTI Consulting (FCN)

Market Cap: $4.62 billion

With a team of experts deployed across 30+ countries to tackle complex business challenges, FTI Consulting (NYSE:FCN) is a global business advisory firm that helps organizations manage change, mitigate risk, and resolve disputes across financial, legal, operational, and regulatory matters.

Why Are We Wary of FCN?

1. Muted 3.6% annual revenue growth over the last two years shows its demand lagged behind its business services peers
2. Incremental sales over the last two years were much less profitable as its earnings per share fell by 1.1% annually while its revenue grew
3. Free cash flow margin shrank by 2.1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive

FTI Consulting is trading at $155.62 per share, or 1.1x forward price-to-sales. Dive into our free research report to see why there are better opportunities than FCN.

Two Business Services Stocks to Watch:

Arlo Technologies (ARLO)

Market Cap: $1.40 billion

Originally spun off from networking equipment maker Netgear in 2018, Arlo Technologies (NYSE:ARLO) provides cloud-based smart security devices and subscription services that help consumers and businesses monitor and protect their homes, properties, and loved ones.

Why Could ARLO Be a Winner?

1. 8.4% annual revenue growth over the last five years surpassed the sector average as its services resonated with customers
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 54% over the last two years outstripped its revenue performance
3. Free cash flow margin increased by 15.5 percentage points over the last five years, giving the company more capital to invest or return to shareholders

Arlo Technologies’s stock price of $12.99 implies a valuation ratio of 16.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

Ryan Specialty (RYAN)

Market Cap: $4.12 billion

Founded in 2010 by insurance industry veteran Patrick Ryan, Ryan Specialty (NYSE:RYAN) is a wholesale insurance broker and underwriting manager that helps retail brokers place complex or hard-to-place risks with insurance carriers.

Why Do We Love RYAN?

1. Market share has increased this cycle as its 20.5% annual revenue growth over the last two years was exceptional
2. Earnings growth has massively outpaced its peers over the last four years as its EPS has compounded at 16.2% annually
3. Robust free cash flow margin of 17.5% gives it many options for capital deployment

At $31.80 per share, Ryan Specialty trades at 14.6x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

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