Business services providers thrive by solving complex operational challenges for their clients, allowing them to focus on their secret sauce. Still, investors are uneasy as firms face challenges from AI-driven disruptors and tightening corporate budgets. These doubts have caused the industry to lag recently as services stocks have collectively shed 12.8% over the past six months. This drawdown was worse than the S&P 500’s 10% fall.

Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. Keeping that in mind, here is one services stock poised to generate sustainable market-beating returns and two that may face trouble.

Two Business Services Stocks to Sell:

Mirion (MIR)

Market Cap: $2.86 billion

With its technology protecting workers in over 130 countries and equipment used in 80% of cancer centers worldwide, Mirion Technologies (NYSE:MIR) provides radiation detection, measurement, and monitoring solutions for medical, nuclear energy, defense, and scientific research applications.

Why Do We Think Twice About MIR?

1. Revenue base of $860.8 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale

2. Expenses have increased as a percentage of revenue over the last five years as its operating margin fell by 7.6 percentage points

3. Below-average returns on capital indicate management struggled to find compelling investment opportunities

At $14.40 per share, Mirion trades at 28.6x forward price-to-earnings. Read our free research report to see why you should think twice about including MIR in your portfolio, it’s free .

Crane NXT (CXT)

Market Cap: $2.56 billion

Born from a corporate transformation completed in 2023, Crane NXT (NYSE:CXT) provides specialized technology solutions for payment processing, banknote security, and authentication systems for financial institutions and businesses.

Why Do We Think CXT Will Underperform?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy

2. Estimated sales growth of 2.2% for the next 12 months implies demand will slow from its two-year trend

3. Incremental sales over the last two years were less profitable as its earnings per share were flat while its revenue grew

Crane NXT’s stock price of $44.66 implies a valuation ratio of 10.2x forward price-to-earnings. To fully understand why you should be careful with CXT, check out our full research report (it’s free) .

One Business Services Stock to Buy:

QuinStreet (QNST)

Market Cap: $907.5 million