Business services providers thrive by solving complex operational challenges for their clients, allowing them to focus on their secret sauce. But cutbacks in corporate spending and the threat of new AI products have kept sentiment in check, and over the past six months, the industry’s 5.6% return has trailed the S&P 500 by 2.6 percentage points.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. With that said, here is one resilient services stock at the top of our wish list and two best left ignored.
Two Business Services Stocks to Sell:
Applied Digital (APLD)
Market Cap: $8.14 billion
Pivoting from its origins in cryptocurrency mining to become a key player in the AI infrastructure boom, Applied Digital (NASDAQ: APLD) designs and operates specialized data centers that provide high-performance computing infrastructure for artificial intelligence and blockchain applications.
Why Is APLD Not Exciting?
- Modest revenue base of $355.5 million means it has less operating leverage but can also grow faster if it executes the right sales strategy
- Cash-burning history makes us doubt the long-term viability of its business model
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Applied Digital is trading at $28.79 per share, or 38.5x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why APLD doesn’t pass our bar.
WEBTOON (WBTN)
Market Cap: $1.54 billion
Pioneering a vertical-scrolling format optimized for mobile devices, WEBTOON Entertainment (NASDAQ: WBTN) operates a global platform where creators publish serialized web-comics and web-novels that users can read in bite-sized episodes.
Why Are We Wary of WBTN?
- Sluggish trends in its monthly active users suggest customers aren’t adopting its solutions as quickly as the company hoped
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 73.5% annually
- Low free cash flow margin of -0.6% for the last four years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
WEBTOON’s stock price of $11.20 implies a valuation ratio of 102.2x forward P/E. Dive into our free research report to see why there are better opportunities than WBTN.
One Business Services Stock to Buy:
Everpure (P)
Market Cap: $25.61 billion
Founded in 2009 as a pioneer in enterprise all-flash storage technology, Everpure (NYSE: P) provides all-flash data storage hardware and software that helps organizations manage their data more efficiently across on-premises and cloud environments.
Why Are We Bullish on P?
- ARR trends over the past two years show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
- Earnings growth has trumped its peers over the last five years as its EPS has compounded at 61.1% annually
- P is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
At $77.00 per share, Everpure trades at 29.8x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
