Bourses have gotten weaker lately, markets stayed volatile, the economy weakened and supply chain disruptions continued. Investing in such a situation becomes somewhat challenging.
However, consideration of certain key factors (sometimes situation-based) can significantly enhance our stock-picking ability, stabilize the portfolio and significantly reduce risks and impacts of uncertainty.
For instance, under the current situation where impacts of COVID-19 on the economy still persist and markets are volatile, picking stocks from spaces benefiting from healthy manufacturing and service activities, essentiality of services, work-from-home strategies, digitization and technological improvements, seems to be a clever idea.
The Service Sector Seems Healthy
The service sector has revived considerably from the pandemic blues, thanks to both manufacturing and non-manufacturing activities that have stayed in the pink over the past two years. Both the manufacturing PMI and the Services PMI, measured by the Institute for Supply Management, have stayed above the 50% mark for the past 24 months, indicating continued expansion.
The pandemic will continue to change the way sector players have conducted businesses and delivered services so far. Currently, the key focus within the sector is on channelizing money and efforts toward more effective operational components, such as technology, digital transformation, data-driven decision-making and enhanced cybersecurity.
To position themselves suitably in the post-pandemic era and better utilize the opportunities that the economic recovery will bring in, service providers are increasing their efforts toward formulating and reassessing strategic initiatives, identifying sources of demand and targeting end markets.
Stocks That Deserve to be in Your Buy List
FTI Consulting, Inc. (FCN – Free Report) : FCN, a leading company in the consulting service space, is one of the earliest pioneers of remote working that has now become a part of the new normal. The company provides business advisory services to manage change, mitigate risks and resolve disputes worldwide.
FTI Consulting’s potential to club diverse issues like damage assessment, accounting, economics, statistics, finance and industry under a single platform makes it an excellent partner for global clients, thereby helping it generate continued revenue growth from its existing international operations. The company is currently benefiting, as amid the ongoing volatile situation, organizations are keenly looking for extensive advice on how to protect their employees and stay closer to consumers and shareholders.
FCN’s top line in the last-reported quarter benefited from strong demand for its business transformation and transactions services; as well as services related to corporate reputation; non-M&A-related antitrust; information governance; privacy and security; cross-border investigations; and litigation.
FCN currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for the 2022 EPS has moved 0.9% north to $6.87, over the past 60 days. The stock has gained 14.3% over the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
ABM Industries Incorporated (ABM – Free Report) : ABM is one of those companies offering services that consumers generally cannot delay. It is a provider of janitorial, facilities engineering, parking, mechanical and electrical services; as well as vehicle maintenance services.
ABM’s strategy entails growth through strategic acquisitions and organic investments. The recent acquisition of Dublin-based janitorial services company, Momentum Support, provides ABM access to the former’s blue-chip customer base and positions it to cross sell ABM services to existing ABM clients who also have a presence in the Republic of Ireland and Northern Ireland. Further, the buyout will strengthen ABM’s foothold in fast-growing markets in Ireland like technology and life sciences.
ABM’s multi-year comprehensive strategic plan, ELEVATE, focuses on providing clients with offerings that enhance transparency and efficiencies, developing its own talent management system capabilities, expanding data usage and modernizing the digital ecosystem. ELEVATE is expected to significantly accelerate the company’s organic growth, improve its strategic and comprehensive positioning, and reinforce profitability.
ABM currently carries a Zacks Rank #2. The Zacks Consensus Estimate for the fiscal 2022 EPS has moved 0.3% north to $3.61 over the past 60 days. The stock has gained 7.1% over the past year.
RCM Technologies, Inc. (RCMT – Free Report) ): A provider of business and technology solutions, this company currently carries a Zacks Rank #2. RCMT is currently benefiting from a strong sales pipeline, strength across all of its business units and strong operating performance.
The Zacks Consensus Estimate for the 2022 EPS has moved more than 100% north to $2, over the past 60 days. The stock appreciated a massive 278.9% over the past year.
Harte Hanks, Inc. (HHS – Free Report) : The main focus areas of this global marketing services company in 2022 are expansion of customer relationships and improving operating margins through prudent utilization of asset-lite operating model and investment in technology.
The company has diversified revenues across segments and customers, and is growing its presence in the healthcare and consumer products verticals.
HHS also carries a Zacks Rank #2. The Zacks Consensus Estimate for its 2022 EPS has moved 6% north to $2 over the past 60 days. The stock has jumped 17.6% over the past year.