Business services providers thrive by solving complex operational challenges for their clients, allowing them to focus on their secret sauce. These firms have helped their customers unlock huge efficiencies, so it’s no surprise the industry has posted a 9% gain over the past six months, nearly mirrorring the S&P 500.

Although these companies have produced results, only a handful will thrive over the long term as AI-driven upstarts are rapidly taking share from the incumbents. With that said, here is one services stock boasting a durable advantage and two we’re steering clear of.

Market Cap: $275.4 billion

With a corporate history spanning over a century and once known for its iconic mainframe computers, IBM (NYSE:IBM) provides hybrid cloud computing platforms, AI solutions, consulting services, and enterprise infrastructure to help businesses modernize their operations.

Why Does IBM Fall Short?

Sizable revenue base leads to growth challenges as its 1.3% annual revenue increases over the last five years fell short of other business services companies

Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 4.2% annually

At $294.76 per share, IBM trades at 24.6x forward P/E. To fully understand why you should be careful with IBM, check out our full research report (it’s free).

Market Cap: $2.58 billion

Processing approximately 100 million background checks annually across more than 200 countries and territories, First Advantage (NASDAQ:FA) provides employment background screening, identity verification, and compliance solutions to help companies manage hiring risks.

Why Is FA Not Exciting?

Earnings per share fell by 4.6% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable

15.1 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position

Underwhelming 0.9% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam

First Advantage’s stock price of $14.75 implies a valuation ratio of 12.6x forward P/E. If you’re considering FA for your portfolio, see our FREE research report to learn more.

Market Cap: $37 billion

Creator of the three-digit number that can determine whether you get a mortgage or credit card, Fair Isaac Corporation (NYSE:FICO) develops analytics software and the widely used FICO Score, which is the standard measure of consumer credit risk in the United States.

Why Is FICO a Top Pick?

Offerings are pivotal for their customers' operations as its ARR has averaged 8.2% growth over the past two years

Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its growing cash flow gives it even more resources to deploy

Rising returns on capital show management is finding more attractive investment opportunities

Fair Isaac Corporation is trading at $1,544 per share, or 37.6x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.