The services sector has been doing exceedingly well ever since the economy reopened in June 2020, following a slump in the initial months of the COVID-19 outbreak. The expansion continues with the index hitting an all-time high in May.
The services sector has been one of the better performing areas despite the pandemic-led disruptions almost throughout 2020. However, things are finally changing since the beginning of this year and the sector is poised to perform well in the coming days as the economy reopens further.
Services Sector Continues to Grow
Per the latest reading from the Institute of Supply Management (ISM), the services purchasing managers’ index (PMI) for May rose to a reading of 64, the highest recorded in the history of the series. The index had hit 62.7% in April.
The earlier record high of 63.7 was recorded in March. The services sector accounts for over two-thirds of U.S. economic activity. A reading of anything above 50% indicates expansion in service activities.
Moreover, the services sector has now grown for 12 consecutive months, indicating the underlying strength in the economy despite the rampage created by the pandemic. The Prices Index came up with a reading of 80.6%. This is 3.8% higher than April’s reading of 76.8%, indicating that prices increased at a faster rate in May.
The last time the Prices Index increased on a monthly basis was in July 2008 when it recorded 77.4%. Per the ISM report, all 18 industries registered growth. Maximum growth was witnessed in retail trade; wholesale trade; construction; arts, entertainment & recreation; transportation & warehousing; and real estate, rental & leasing industries.
Reopening to Boost Business Activity
The services sector had contracted41.8% and 45.4% last year in April and May, respectively, but has been growingsince then.
As more people worked and learnt from home during the pandemic, they became technology-dependent, giving a boost to tech services. Also, spending on services gained traction as people slowed down their investment in goods.
Per the ISM report, the Business Activity Index increased to 66.2% in May from 62.7% a month earlier. This was mainly because when the economy reopened, people started making travel plans, ate at restaurants and started visiting stores. Besides, the New Export Order Index also increased to 60% in May from 58.6% in April.
Business services are only likely to increase in the coming months as more people get vaccinated and the economy further reopens. This will only help people get back their confidence and help business services to grow.
Our Choices
The services sector is poised to grow on vaccination and more purchasing power from the government stimulus. Given this situation,it would be ideal to invest in these four stocks.
IBEX Limited (IBEX - Free Report) is a provider of outsourced CX solutions. It offers customer support, technical support, inbound/outbound sales, business intelligence and analytics, digital demand generation, and CX surveys and feedback analytics service.
The company’s expected earnings growth rate for the current year is 32.1%. The Zacks Consensus Estimate for current-year earnings has improved 7.8% over the past 60 days. IBEX Limitedholds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Avis Budget Group, Inc. (CAR - Free Report) operates as a leading vehicle rental operator in North America, Europe and Australasia with an average rental fleet of nearly 650,000 vehicles.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the past 30 days. Avis Budget Group has a Zacks Rank #2.
Concentrix Corporation (CNXC - Free Report) provides technology-enabled business services. The company serves the technology & consumer electronics; retail, travel & e-commerce; banking, financial services & insurance; healthcare; communications & media; automotive; and energy & public sectors.
The company’s expected earnings growth rate for the current year is 48.8%. The Zacks Consensus Estimate for current-year earnings has improved 2.9% over the past 60 days. The company carries a Zacks Rank #2.
Everi Holdings Inc. (EVRI - Free Report) is a holding company that operates through subsidiaries, Global Cash Access, Inc. and Multimedia Games Holding Company, Inc. The Company's segments include Games and Payments.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the past 60 days. Everi Holdings has a Zacks Rank #2.
Vectrus, Inc. engages in providing infrastructure asset management, logistics and supply chain management, and information technology and network communication services.
The company’s expected earnings growth rate for the current year is 38.2%. The Zacks Consensus Estimate for current-year earnings has improved 11% over the past 60 days. Vectrus holds a Zacks Rank #2.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
The services sector has been doing exceedingly well ever since the economy reopened in June 2020, following a slump in the initial months of the COVID-19 outbreak. The expansion continues with the index hitting an all-time high in May.
The services sector has been one of the better performing areas despite the pandemic-led disruptions almost throughout 2020. However, things are finally changing since the beginning of this year and the sector is poised to perform well in the coming days as the economy reopens further.
Services Sector Continues to Grow
Per the latest reading from the Institute of Supply Management (ISM), the services purchasing managers’ index (PMI) for May rose to a reading of 64, the highest recorded in the history of the series. The index had hit 62.7% in April.
The earlier record high of 63.7 was recorded in March. The services sector accounts for over two-thirds of U.S. economic activity. A reading of anything above 50% indicates expansion in service activities.
Moreover, the services sector has now grown for 12 consecutive months, indicating the underlying strength in the economy despite the rampage created by the pandemic. The Prices Index came up with a reading of 80.6%. This is 3.8% higher than April’s reading of 76.8%, indicating that prices increased at a faster rate in May.
The last time the Prices Index increased on a monthly basis was in July 2008 when it recorded 77.4%. Per the ISM report, all 18 industries registered growth. Maximum growth was witnessed in retail trade; wholesale trade; construction; arts, entertainment & recreation; transportation & warehousing; and real estate, rental & leasing industries.
Reopening to Boost Business Activity
The services sector had contracted41.8% and 45.4% last year in April and May, respectively, but has been growingsince then.
As more people worked and learnt from home during the pandemic, they became technology-dependent, giving a boost to tech services. Also, spending on services gained traction as people slowed down their investment in goods.
Per the ISM report, the Business Activity Index increased to 66.2% in May from 62.7% a month earlier. This was mainly because when the economy reopened, people started making travel plans, ate at restaurants and started visiting stores. Besides, the New Export Order Index also increased to 60% in May from 58.6% in April.
Business services are only likely to increase in the coming months as more people get vaccinated and the economy further reopens. This will only help people get back their confidence and help business services to grow.
Our Choices
The services sector is poised to grow on vaccination and more purchasing power from the government stimulus. Given this situation,it would be ideal to invest in these four stocks.
IBEX Limited (IBEX - Free Report) is a provider of outsourced CX solutions. It offers customer support, technical support, inbound/outbound sales, business intelligence and analytics, digital demand generation, and CX surveys and feedback analytics service.
The company’s expected earnings growth rate for the current year is 32.1%. The Zacks Consensus Estimate for current-year earnings has improved 7.8% over the past 60 days. IBEX Limitedholds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Avis Budget Group, Inc. (CAR - Free Report) operates as a leading vehicle rental operator in North America, Europe and Australasia with an average rental fleet of nearly 650,000 vehicles.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the past 30 days. Avis Budget Group has a Zacks Rank #2.
Concentrix Corporation (CNXC - Free Report) provides technology-enabled business services. The company serves the technology & consumer electronics; retail, travel & e-commerce; banking, financial services & insurance; healthcare; communications & media; automotive; and energy & public sectors.
The company’s expected earnings growth rate for the current year is 48.8%. The Zacks Consensus Estimate for current-year earnings has improved 2.9% over the past 60 days. The company carries a Zacks Rank #2.
Everi Holdings Inc. (EVRI - Free Report) is a holding company that operates through subsidiaries, Global Cash Access, Inc. and Multimedia Games Holding Company, Inc. The Company's segments include Games and Payments.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the past 60 days. Everi Holdings has a Zacks Rank #2.
Vectrus, Inc. engages in providing infrastructure asset management, logistics and supply chain management, and information technology and network communication services.
The company’s expected earnings growth rate for the current year is 38.2%. The Zacks Consensus Estimate for current-year earnings has improved 11% over the past 60 days. Vectrus holds a Zacks Rank #2.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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