For Immediate Release
Chicago, IL – June 08, 2017 – Today, Zacks Equity Research discusses the Industry: Business Services, Part 3, includingWestern Union Company (NYSE: WU – Free Report ), MoneyGram International Inc. (NASDAQ: MGI – Free Report ), Acacia Research Corp. (NASDAQ: ACTG – Free Report ), Avis Budget Group, Inc. (NASDAQ: CAR – Free Report ) and PRGX Global, Inc. (NASDAQ: PRGX – Free Report ).
Industry: Business Services, Part 3
Despite the positives in the Business Services, we cannot ignore the headwinds limiting the positives mentioned in “ Will Increasing Employment Support Business Services Stocks? ”
Discussed below are some inherent challenges faced by the Business Services sector:
Continuous Spending on Research and Development : Importantly, consulting service providers need to stay abreast of the latest technologies through continuous spending on research and development. The performance of these providers can be hampered if they do not acclimate to or adopt new services to cope with the latest developments.
Maintaining Skilled Workforce Involves High Costs : Since skilled workers are always in demand, there is a possibility of a high turnover rate in the sector. The training of unskilled workers or taking in new skilled workers increases operational costs, in turn affecting margins. This space needs to have a more skilled workforce to take advantage of technology that develops at a rapid pace.
Competition: Maintaining or increasing market share remains challenging for business service providers. As discussed earlier, the main business of one company can be a business service for another. So target customers for both may at times be the same.
Therefore, a business service provider needs to be adequately equipped to win over customers. While larger providers bank on the broad variety of service offerings and can effectively take up difficult ventures, the relatively smaller players compete in an industry backed by specialized services.
Regulatory Hurdles : By virtue of having operations across the globe, service providers face regulatory hurdles and compliance-related issues. The Western Union Company (NYSE:WU – Free Report ) expects compliance costs to be at the higher end of 3.5–4% in 2017.
MoneyGram International Inc. (NASDAQ: MGI – Free Report ) is being probed by a federal grand jury in relation to its consumer anti-fraud and anti-money laundering programs for 2003 to early 2009. The company is also involved in many other government investigations and litigations. Any adverse results from the investigation might lead to potential liability against damages, which could put pressure on margins and cash flows.
Based on an unfavorable Zacks Rank, we prefer to avoid Acacia Research Corp. (NASDAQ:ACTG – Free Report ), Avis Budget Group, Inc. (NASDAQ: CAR – Free Report ) and PRGX Global, Inc. (NASDAQ: PRGX – Free Report ), which carry a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
The dearth of skilled labor in the business services sector can affect its prospects. Non-availability of quality workforce at a reasonable rate might increase overall operational costs.
In addition, the highly fragmented nature of the industry makes it difficult for such companies to set a distinct trend or predict a concrete future for it.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana. Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
Get the full Report on WU - FREE
Get the full Report on MGI - FREE
Get the full Report on ACTG - FREE
Get the full Report on CAR - FREE
Get the full Report on PRGX - FREE
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Click for Free Western Union Company (The) (WU) Stock Analysis Report >>
Click for Free Moneygram International, Inc. (MGI) Stock Analysis Report >>
Click for Free Acacia Research Corporation (ACTG) Stock Analysis Report >>
Click for Free Avis Budget Group, Inc. (CAR) Stock Analysis Report >>
Click for Free PRGX Global, Inc. (PRGX) Stock Analysis Report >>
To read this article on Zacks.com click here.
Zacks Investment Research