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 11.4% return has trailed the S&P 500 by 2 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. Keeping that in mind, here are two services stocks boasting durable advantages and one that may face trouble.
One Business Services Stock to Sell:
Driven Brands (DRVN)
Market Cap: $2.49 billion
With approximately 5,000 locations across 49 U.S. states and 13 other countries, Driven Brands (NASDAQ: DRVN) operates a network of automotive service centers offering maintenance, car washes, paint, collision repair, and glass services across North America.
Why Does DRVN Fall Short?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and in-store experience
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Push for growth has led to negative returns on capital, signaling value destruction, and its falling returns suggest its earlier profit pools are drying up
Driven Brands’s stock price of $15.14 implies a valuation ratio of 10.8x forward P/E. To fully understand why you should be careful with DRVN, check out our full research report (it’s free for active Edge members).
Two Business Services Stocks to Watch:
Arlo Technologies (ARLO)
Market Cap: $1.48 billion
Originally spun off from networking equipment maker Netgear in 2018, Arlo Technologies (NYSE: ARLO) provides cloud-based smart security devices and subscription services that help consumers and businesses monitor and protect their homes, properties, and loved ones.
Why Do We Like ARLO?
- Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 120% over the last two years outstripped its revenue performance
- Free cash flow margin grew by 16.5 percentage points over the last five years, giving the company more chips to play with
At $13.97 per share, Arlo Technologies trades at 19x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
NetApp (NTAP)
Market Cap: $21.96 billion
Founded in 1992 as a pioneer in networked storage technology, NetApp (NASDAQ: NTAP) provides data storage and management solutions that help organizations store, protect, and optimize their data across on-premises data centers and public clouds.
Why Could NTAP Be a Winner?
- Billings have averaged 7.2% growth over the past two years, showing it’s securing new contracts that could potentially increase in value over time
- Adjusted operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- NTAP is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its rising cash conversion increases its margin of safety
NetApp is trading at $110.94 per share, or 13.5x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.
