5 Business Services Stocks That Have More Than Doubled in 2020
This year saw the worst downfall of the economy since the Great Depression, a record fast bear market and an equally quick “V-shaped” recovery, backed by fiscal and monetary policy stimulus. Notably, the U.S. economy recorded massive 33.1% growth in the third quarter of 2020 as against a huge downfall of 31.4% in the second quarter of 2020.
The Business Services sector has been gaining strength with the gradual resumption of business activities. Currently, while growth in services pertaining to retail, wholesale, professional, technical, information, finance, transportation, warehousing is a positive for the space, weakness in entertainment, travel, rental, leasing and educational services is a concern.
Services Sector Scenario So Far in 2020
At the start of the year, the sector struggled with waning global demand and a prolonged U.S.-China trade war. The coronavirus pandemic thereafter brought almost every business to a near stand-still due to strict lockdowns across the globe. Per the Institute for Supply Management, the Services Purchasing Managers’ Index (PMI) plunged to 41.8% in April — the lowest reading since May 2009. The index remained below the 50 mark in April and May, interrupting an impressive growth rally of 122 consecutive months.
Despite such disappointing numbers, the Services PMI rebounded with the gradual reopening of the economy and resumption of business activities, and has been above 50 for seven straight months since June, highlighting expansion in service activities. It reached 55.9% growth in November.
5 Business Services Stocks That Warrant a Look
We have picked five Business Services stocks, which have gained more than 100% in 2020 and have market capitalization of more than $1 billion. Additionally, these stocks have witnessed upward estimate revisions in the past 90 days and have a solid four-quarter average earnings surprise history. The buoyancy in the sector is further confirmed by its Zacks Sector Rank #7, which places it in the top 41% of the 16 Zacks sectors.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Riot Blockchain, Inc. RIOT): This Zacks Rank #2 (Buy) Colorado-basedcompany focuses on building, supporting, and operating Blockchain technologies ecosystem. The company has been doing well on the back of increased cryptocurrency mining revenues.
The Zacks Consensus Estimate for the company’s 2020 EPS has moved up 26% in the past 90 days. The company’s expected earnings growth rate for the year is 28.8%. The company has a trailing four-quarter earnings surprise of 3.4%, on average. The stock has rallied 1309.9% year to date. It has a market capitalization of $1.06 billion.
DocuSign, Inc. DOCU): This Zacks Rank #3 (Hold) California-based company provides cloud based software in the United States and internationally.
The company is known for authenticating documents over the Internet through electronic signature. It leverages blockchain technology to enable customers to adapt to smart tech and make paper agreements digital. The company’s Trust Service Provider model helps users to integrate any blockchain-based identity providers and enhance security while authenticating a signer.
The Zacks Consensus Estimate for the company’s 2020 EPS has moved up 37% in the past 90 days. The company’s expected earnings growth rate for the year is more than 100%. The company has a trailing four-quarter earnings surprise of 93.8%, on average. The stock has rallied 207.9% year to date. It has a market capitalization of $42.76 billion.
Elastic N.V., (ESTC): This Zacks Rank #2 California-based search company, delivers technology that enables users to search through structured and unstructured data for a range of consumer and enterprise applications.
The company’s top line has been performing well on the back of strength across its subscription revenues and professional services revenues. While the company’s subscription revenues are expected to have increased due to increased demand across Enterprise Search observability and security, professional services revenues are likely to have been driven by growth in service orders. Meanwhile, strong revenue performance and expense management are likely to have benefited the bottom line.
The Zacks Consensus Estimate for the company’s 2020 EPS has moved up 37% in the past 90 days. The company’s expected earnings growth rate for the year is 63.4%. The company has a trailing four-quarter earnings surprise of 74.9%, on average. The stock has rallied 130% year to date. It has a market capitalization of $13.31 billion.
Green Dot Corporation (GDOT): This Zacks Rank #4 (Sell) California-based company operates as a financial technology and bank holding company in the United States.
Despite coronavirus-induced adversities, Green Dot’s bottom line has been doing well on the back of improvement in operational efficacy. Accelerated investments in products and platform parts bode well for Green Dot’s business in the mid- to long term. The company continues to improve and scale its operating infrastructure. Its banking as a Service or BaaS platform programs are growing quickly, contributing to GDV and active card growth. The company's long-lasting relationship with Walmart is a key driver of operating revenues.
The Zacks Consensus Estimate for the company’s 2020 EPS has moved up 2.1% in the past 90 days. The company has a trailing four-quarter earnings surprise of 53.37%, on average. The stock has rallied 128.3% year to date. It has a market capitalization of $2.93 billion.
SailPoint Technologies Holdings, Inc. (SAIL):This Zacks Rank #3Texas-based companydesigns, develops, and markets identity governance software solutions in the United States, Europe, the Middle East, Africa, and internationally.
Amid this challenging scenario, SailPoint Technologies has been doing well backed by strength across all geographies and solid momentum in the company’s Software as a Service (SaaS) business. Rise in license and subscription revenues and revenues from consulting and training services has been aiding top-line growth.
The Zacks Consensus Estimate for the company’s 2020 EPS has moved up more than 100% in the past 90 days. The company’s expected earnings growth rate for the year is 45%. The company has a trailing four-quarter earnings surprise of 310.21%, on average. The stock has rallied 125.9% year to date. It has a market capitalization of $4.89 billion.
Zacks Top 10 Stocks for 2021
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Green Dot Corporation (GDOT) : Free Stock Analysis Report
Riot Blockchain, Inc. (RIOT) : Free Stock Analysis Report
SailPoint Technologies Holdings, Inc. (SAIL) : Free Stock Analysis Report
DocuSign Inc. (DOCU) : Free Stock Analysis Report
Elastic N.V. (ESTC) : Free Stock Analysis Report
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