Business services providers play a critical role for enterprises, assisting them with everything from new hardware integrations to consulting and marketing. Furthermore, the demand for their offerings is rising as more clients outsource non-core functions, a trend that has enabled the industry to return 11.8% over the past six months, almost identical to the S&P 500.
Regardless of these results, investors must exercise caution as many companies in this space are sensitive to the ebbs and flows of the broader economy. On that note, here are three services stocks best left ignored.
ICF International (ICFI)
Market Cap: $1.79 billion
Operating at the intersection of policy, technology, and implementation for over five decades, ICF International (NASDAQ: ICFI) provides professional consulting services and technology solutions to government agencies and commercial clients across energy, health, environment, and security sectors.
Why Is ICFI Risky?
- Product roadmap and go-to-market strategy need to be reconsidered as its backlog has averaged 2.9% declines over the past two years
- Projected sales decline of 3% for the next 12 months points to an even tougher demand environment ahead
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 6% annually
At $96.94 per share, ICF International trades at 13.9x forward P/E. Dive into our free research report to see why there are better opportunities than ICFI.
Crane NXT (CXT)
Market Cap: $2.97 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 Should You Sell CXT?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 6.3% annually
- Free cash flow margin shrank by 11.5 percentage points over the last four years, suggesting the company is consuming more capital to stay competitive
Crane NXT is trading at $51.32 per share, or 11.5x forward P/E. Check out our free in-depth research report to learn more about why CXT doesn’t pass our bar.
Kforce (KFRC)
Market Cap: $596.8 million
With nearly 60 years of matching skilled professionals with the right opportunities, Kforce (NYSE: KFRC) is a professional staffing company that specializes in placing technology and finance experts with businesses on both temporary and permanent bases.
Why Do We Avoid KFRC?
- Flat sales over the last five years suggest it must find different ways to grow during this cycle
- Earnings per share have contracted by 1.4% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
- Diminishing returns on capital suggest its earlier profit pools are drying up
Kforce’s stock price of $34.63 implies a valuation ratio of 15.7x forward P/E. To fully understand why you should be careful with KFRC, check out our full research report (it’s free).
Stocks We Like More
Check out the high-quality names we’ve flagged in 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 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.
