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Consulting Services Industry Momentum Continues: 5 Stocks to Watch
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The multi-billion-dollar consulting services industry has witnessed exponential growth since the 2008 financial crisis, enjoying a steady rate of revenues, profit and cash-flow growth, enabling most industry players to pay out stable dividends.
The industry is in good shape, driven by a healthy demand environment for services. This is highlighted by the Services PMI measured by the Institute for Supply Management, which stayed above 50% till April 2023 after contracting in December 2022, following 30 consecutive months of expansion. It clocked 0.7% growth from March 2023 to April 2023, touching 51.9%.
Consulting services is one of the industries least affected by the pandemic. This is because, even amid a volatile situation, organizations require extensive advice on how to protect their employees, and stay closer to consumers and shareholders. This industry is one of the pioneers of remote working, which has become part of the new normal. The nature of work enables industry players to function efficiently through increased use of technology. This is again highlighted by the share price rally of major consulting service providers ranging from 11% to 34% over the past year.
General Industry Strength Intact
With the pandemic gradually subsiding, the focus of the industry is currently on channelizing money and efforts to more effective operational components, such as technology, digital transformation and data-driven decision-making. To position themselves suitably in the post-pandemic era and better utilize opportunities that the economic recovery will bring, service providers are increasing their efforts to formulate and reassess strategic initiatives, identify sources of demand, and target end markets.
With services becoming more customer-centric through higher speed, incremental deliverables, and cloud technology, the consulting services industry will likely witness healthy growth on internationalization and the expansion of newer verticals, such as design thinking, digital and cybersecurity.
Global players have heightened their focus on speed, agility, analytics and business process redesign. They are also making technology investments and expanding in areas beyond the United States and Europe to other industrialized regions and growing economies. These companies are increasingly banking on trends, such as AI, analytics, cybersecurity and digital.
Stocks That Warrant a Look
Over the past year, the stocks of five major consulting firms have had an impressive run on the bourses. Huron Consulting Group (HURN - Free Report) , Gartner (IT - Free Report) , Stantec (STN - Free Report) , CBIZ (CBZ - Free Report) and FTI Consulting (FCN - Free Report) have appreciated 33.8%, 28.8%, 28.3%, 21.6% and 12.9%, respectively, in the same period.
Image: Bigstock
Consulting Services Industry Momentum Continues: 5 Stocks to Watch
The multi-billion-dollar consulting services industry has witnessed exponential growth since the 2008 financial crisis, enjoying a steady rate of revenues, profit and cash-flow growth, enabling most industry players to pay out stable dividends.
The industry is in good shape, driven by a healthy demand environment for services. This is highlighted by the Services PMI measured by the Institute for Supply Management, which stayed above 50% till April 2023 after contracting in December 2022, following 30 consecutive months of expansion. It clocked 0.7% growth from March 2023 to April 2023, touching 51.9%.
Consulting services is one of the industries least affected by the pandemic. This is because, even amid a volatile situation, organizations require extensive advice on how to protect their employees, and stay closer to consumers and shareholders. This industry is one of the pioneers of remote working, which has become part of the new normal. The nature of work enables industry players to function efficiently through increased use of technology. This is again highlighted by the share price rally of major consulting service providers ranging from 11% to 34% over the past year.
General Industry Strength Intact
With the pandemic gradually subsiding, the focus of the industry is currently on channelizing money and efforts to more effective operational components, such as technology, digital transformation and data-driven decision-making. To position themselves suitably in the post-pandemic era and better utilize opportunities that the economic recovery will bring, service providers are increasing their efforts to formulate and reassess strategic initiatives, identify sources of demand, and target end markets.
With services becoming more customer-centric through higher speed, incremental deliverables, and cloud technology, the consulting services industry will likely witness healthy growth on internationalization and the expansion of newer verticals, such as design thinking, digital and cybersecurity.
Global players have heightened their focus on speed, agility, analytics and business process redesign. They are also making technology investments and expanding in areas beyond the United States and Europe to other industrialized regions and growing economies. These companies are increasingly banking on trends, such as AI, analytics, cybersecurity and digital.
Stocks That Warrant a Look
Over the past year, the stocks of five major consulting firms have had an impressive run on the bourses. Huron Consulting Group (HURN - Free Report) , Gartner (IT - Free Report) , Stantec (STN - Free Report) , CBIZ (CBZ - Free Report) and FTI Consulting (FCN - Free Report) have appreciated 33.8%, 28.8%, 28.3%, 21.6% and 12.9%, respectively, in the same period.
CBIZ and Huron Consulting currently have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other stocks mentioned above are potential picks for your portfolio, as all these firms carry a Zacks Rank #3 (Hold) at present.
The chart below shows the one-year price performance of the five major consulting stocks.
Image Source: Zacks Investment Research