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Here's Why You Should Add Accenture to Your Portfolio Now

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Best Buy (BBY) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.

A wise investment decision involves buying well-performing stocks at the right time while selling those that are at risk. A rise in share price and strong fundamentals signal a stock’s bullish run.

Accenture plc ACN is a consulting services stock that has performed extremely well over the past year. We believe it has potential to carry the momentum in the near term. Therefore, if you haven’t taken advantage of the share price appreciation yet, it’s time you add the stock to your portfolio.

What Makes Accenture an Attractive Pick?

An Outperformer: A glimpse of the company’s price trend reveals that the stock has had an impressive run on the bourse over the past year. Shares of Accenture have rallied 28.4%, comparing favorably with the S&P 500’s gain of 12.9%.

Solid Rank & VGM Score: Accenture currently has a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.

Northward Estimate Revisions: For fiscal 2018, seven estimates moved north over the past 60 days, reflecting analysts’ confidence in the company. The Zacks Consensus Estimate for the same year inched up 0.3% in the same time frame.

Positive Earnings Surprise History: Accenture has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering a positive average earnings surprise of 3.8%.

Strong Growth Prospects: The Zacks Consensus Estimate for fiscal 2018 earnings is currently pegged at $6.68, reflecting year-over-year growth of 13%. Moreover, earnings are expected to register 8.8% growth in fiscal 2019. The stock has long-term expected earnings per share growth rate of 10%.

Growth Drivers: Acquisition is Accenture's key growth strategy that helps it to enhance differentiation and competitiveness. In fiscal 2017, Accenture closed 37 acquisition deals worth $1.7 billion. So far this year, the company has either closed or is in the process of acquiring seven businesses. In fact, it has invested approximately $3.4 billion in acquiring nearly 70 companies or start-ups over the last three fiscals.

We believe Accenture’s strategy of enhancing its cloud capabilities through acquisitions is a step in the right direction. This is evident from the recent forecast by several independent research firms. According to a research firm, Gartner, the worldwide public cloud revenues are likely to grow 21.4% in 2018 to $186.4 billion, up from $153.5 billion in 2017.

For fiscal 2018, International Data Corporation (IDC) forecasted spending on public cloud services and infrastructure to increase 23.2% year over year to $160 billion. Per the research firm, the market will witness a compounded annual growth rate (CAGR) of 21.9% during the 2016-2021 period, with public cloud services spending reaching $277 billion in 2021. We believe that Accenture is well positioned to take advantage of projected growth in the cloud segment.

Accenture PLC Revenue (TTM)

Accenture PLC Revenue (TTM) | Accenture PLC Quote

The company has also strengthened its digital marketing capabilities through some significant acquisitions, including Reactive Media, Acquity Group Ltd., dgroup and OCTO Technology.

Of late, Accenture completed the acquisition of New York-based digital agency — Meredith Xcelerated Marketing. This buyout is expected to assist the company in creative content strategy, digital marketing and boost its marketing services by enhancing its data and content offerings. In fact, it is likely to help Accenture expand studios in several U.S. markets like —Dallas, Des Moines, Detroit, Los Angeles, New York and Washington D.C.

Other Stocks to Consider

Some other top-ranked stocks in the broader Business Services sector include Convergys Corporation CVG, Automatic Data Processing ADP and Broadridge Financial Solutions Inc. BR. All the stocks currently carry a Zacks Rank of 2.

The long-term expected earnings per share growth rates for Convergys, Automatic Data Processing and Broadridge are 9%, 11% and 10%, respectively.

The Hottest Tech Mega-Trend of All

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See Zacks' 3 Best Stocks to Play This Trend >>

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