Yahoo Finance 4 Stocks to Buy as Services Sector Makes Solid Rebound
The US services sector witnessed a solid rebound in May after contracting marginally in April amid growing concerns over inflation and interest rate cuts. The Institute for Supply Management reported on Jun 5 that its nonmanufacturing purchasing managers index jumped to 53.8 in May from 49.4 the month earlier.
The expansion in services activity is the most in nearly three years, while the reading is the highest since August 2023. It was also above the consensus estimate of a reading of 50.8.
The Business Activity Index climbed to 61.2% in May, 10.3% higher than the 50.9% recorded in April. This was also the maximum rise since March 2021 and the highest reading since November 2022.
The New Orders Index rose to 54.1% in May, up 1.9% from April’s reading of 52.2% and the 17th straight month increase after contracting in December 2022 for the first time since May 2020.
The services sector contracted in April for the first time since December 2022 and has now expanded in 46 out of the past 48 months. The sector continued to grow despite rising prices and inflationary pressures.
Consumers have curtailed spending on goods over the past year as high commodity prices continue to hurt. However, spending on services has been on the rise since the pandemic eased in 2021.
The Federal Reserve’s FOMC meeting is scheduled for June 11-12, and the central bank is expected to leave interest rates unchanged in the range of 5.25-5.5%. However, market participants are expecting a 25-basis-point rate cut in September and another by December, as a decline in inflation in April and a cooling job market have made investors hopeful of a rate cut.
Lower borrowing rates bode well for the services sector and the broader economy.
Our Choices
The present situation makes for an ideal opportunity to invest in business services stocks such as Xperi Inc. XPER, Booz Allen Hamilton Holding Corporation BAH, Maplebear Inc. CART and HNI Corporation HNI. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Xperi Inc. invents, develops and delivers technologies. XPER built a powerful portfolio of entertainment technology brands such as TiVo(R), DTS(R), IMAX Enhanced(R) and HD Radio(TM), which it will leverage to accelerate its media platform business by pursuing engagement-based, recurring advertising and data analytics revenues.
Xperi’s expected earnings growth rate for the current year is 3,900%. The Zacks Consensus Estimate for current-year earnings has improved 8.1% over the past 60 days. XPER presently has a Zacks Rank #2.
Booz Allen Hamilton Holding Corporation is a provider of management and technology consulting, analytics, engineering, digital solutions, mission operations, as well as cyber expertise to the United States and international governments, corporations, plus not-for-profit organizations. BAH operates as a single profit center with a single bonus pool for partners, vice presidents, principals and senior associates.
Booz Allen Hamilton Holding Corporation’s expected earnings growth rate for the current year is 8.9%. The Zacks Consensus Estimate for current-year earnings has improved 3.1% over the past 60 days. BAH currently carries a Zacks Rank #2.
Maplebear Inc. is a grocery technology company principally in North America that works with grocers and retailers to transform how people shop. CART’s Instacart Platform offers retailers a suite of enterprise-grade technology products and services to power their e-commerce experiences, fulfill orders, digitize brick-and-mortar stores, provide advertising services, and glean insights.
Maplebear’s expected earnings growth rate for the current year is 108.2%. The Zacks Consensus Estimate for current-year earnings has improved 92.5% over the past 60 days. CART presently carries a Zacks Rank #2.
HNI Corporation provides products and solutions for the home and workplace environments. HNI is a leading global provider and designer of office furniture and the leading manufacturer and marketer of hearth products. HNI Corporation sells the broadest and deepest selection of quality office furniture solutions available to meet the needs of every customer through an extensive portfolio of well-known and trusted brands.
HNI Corporation’s expected earnings growth rate for the current year is 17%. The Zacks Consensus Estimate for current-year earnings has improved 5.8% over the past 60 days. HNI presently sports a Zacks Rank #1.
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Booz Allen Hamilton Holding Corporation (BAH) : Free Stock Analysis Report
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Xperi Inc. (XPER) : Free Stock Analysis Report
Maplebear Inc. (CART) : Free Stock Analysis Report
