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 has tumbled by 6.3%. This drawdown was discouraging since the S&P 500 held steady.
Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. On that note, here are three services stocks we think can generate sustainable market-beating returns.
Planet Labs (PL)
Market Cap: $1.17 billion
Pioneering the concept of "agile aerospace" with hundreds of small but powerful satellites, Planet Labs (NYSE: PL) operates the world's largest fleet of Earth observation satellites, capturing daily images of our planet to provide insights on deforestation, agriculture, and climate change.
Why Do We Love PL?
- Impressive 20.6% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Earnings per share grew by 37.4% annually over the last three years and trumped its peers
- Cash burn has become less severe over the last five years, showing the company is making some progress toward financial sustainability
At $3.90 per share, Planet Labs trades at 81.6x forward EV-to-EBITDA. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Globalstar (GSAT)
Market Cap: $2.43 billion
Known for powering the emergency SOS feature in newer Apple iPhones, Globalstar (NASDAQ: GSAT) operates a network of low-earth orbit satellites that provide voice and data communications services in remote areas where traditional cellular networks don't reach.
Why Do We Like GSAT?
- Annual revenue growth of 20.7% over the last two years was superb and indicates its market share increased during this cycle
- Additional sales over the last two years increased its profitability as the 33.7% annual growth in its earnings per share outpaced its revenue
- Robust free cash flow margin of 27.9% gives it many options for capital deployment, and its improved cash conversion implies it’s becoming a less capital-intensive business
Globalstar’s stock price of $19.18 implies a valuation ratio of 23.4x forward EV-to-EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.
Pure Storage (PSTG)
Market Cap: $18.5 billion
Founded in 2009 as a pioneer in enterprise all-flash storage technology, Pure Storage (NYSE: PSTG) provides all-flash data storage hardware and software that helps organizations manage their data more efficiently across on-premises and cloud environments.
Why Is PSTG a Good Business?
- 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
- Additional sales over the last five years increased its profitability as the 30.3% annual growth in its earnings per share outpaced its revenue
- PSTG is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its recently improved profitability means it has even more resources to invest or distribute
Pure Storage is trading at $56.54 per share, or 32x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.
