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Momo Is ON for Computer Services Stocks

John Blank

The 13-company-strong Computer Services industry is ‘hot’ now.

Why? I see four good reasons.

First, the stock group scores a premium Zacks Industry Rank of #32 out of 265 (top 12%).

Over the last 8 weeks, our Zacks Heat Map has this Info Tech industry niche as high as #26 out of 265 (top 10%); and it shows no lower than a #74 rank out of 265 (top 28%).

Second, there are earnings beats galore. The last quarter showed 8 out of 13 companies in the group (62%) beat their Zacks Consensus earnings estimate.

Confirm below.

 

Third, we've all heard the old trading adage: 50% of a stock's price movement can be attributed to the group it's in. In fact, studies have shown just getting into an average stock in a strong industry is likely to outperform a great stock in a poor industry.

Does the Computer Services industry group really deliver higher stock returns, vis-à-vis the average composed of the S&P 500 index?

Yes! It does. Broad trading momentum (momo) is ON for shares in this group.

Confirm that in the Stock Returns Performance chart next.

 

Finally, the Zacks Computer - Services industry primarily comprises firms offering cloud and software-based solutions. This is sexy Info Tech business model stuff. One that is (obviously) very attractive to momentum traders.

Their tech service offerings include national security solutions, business support solutions, systems engineering, and software application development solutions.

Three Top Stocks Inside Computer Services

(1) Perficient (PRFT) and its Perficient Digital agency deliver vision, execution, and value with outstanding digital experience, business optimization, and industry solutions.

Their work enables clients to improve productivity and competitiveness; grow and strengthen relationships with customers, suppliers, and partners; and reduce costs.

Its solutions include big data and analytics, technology platform implementations, commerce, enterprise content management, portals and collaboration, management consulting, custom applications, business integration, business process management, and customer relationship management, among others.

Yes, this is the sole Zacks #1 Rank (STRONG BUY) stock in the group.

However, this hot stock’s Zacks Value Score is D, and the Growth score is F. The shares have run up this year, from $21 a share to $32 a share now.

You might want to wait for a pullback before buying. It has a $1.0B market cap, making it a risky small cap stock.

(2) CSG Systems International (CSGS) is a leading provider of outsourced billing, customer care and print and mail solutions and services supporting the North American cable and direct broadcast satellite markets.

CSG's solutions support some of the world's largest and most innovative providers of bundled multi-channel video, Internet, voice and IP-based services.

This is a Zacks #2 Rank (BUY) stock, with a $1.5B market capitalization. The Zacks Value score is much better here, at B. The Zacks Growth score is D.

Again, we see the YTD share price gains. This was a $30 stock at the start of the year. It is a $46 stock now.

(3) ManTech International (MANT) is a leading provider of innovative technologies and solutions for mission-critical national security programs for the Intelligence Community; the Departments of Defense, State, Homeland Security, and Justice; the Space Community; and other U.S. federal government customers. 

This Zacks #2 Rank (BUY) stock shows us a $2.5B market capitalization, making it a mid-cap stock.

The Zacks Value score is C and the Zacks Growth score is A. With an overall Zacks VGM score of B, this guy has the better overall quantitative metrics.

Shares started the year at $52 and are now priced at $62.

 

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Perficient, Inc. (PRFT) : Free Stock Analysis Report
 
ManTech International Corporation (MANT) : Free Stock Analysis Report
 
CSG Systems International, Inc. (CSGS) : Free Stock Analysis Report
 
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