We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Stocks in the Business Services sector have been strong performers lately, reflecting the group’s favorable fundamentals, which we have listed below. This should give readers a good sense of the factors that are expected to help these stocks over the near- to medium-term.
Asset-light Business Model: By virtue of the nature of its operations, these companies provide services instead of products to others. This, in turn, frees them from producing goods that would otherwise need manufacturing facilities. As a result, business services do not have inventory or stock, and thus do not have to bear costs for such items.
Moreover, services can be tailor-made for any situation. This is not possible or feasible for something tangible.
Labor Intensive: The sector, which offers intangible products, has immense employment opportunities as it requires both skilled and unskilled labor for its smooth functioning.
Per the Bureau of Labor Statistics, the unemployment rate in August was 4.4%, with non-farm payroll employment increasing nearly 0.2 million in the month. Jobs were added in manufacturing, construction, professional and technical services, health care and mining industries. Unemployment decreased 50 basis points since August 2016. The professional and business service industry added 0.02 million jobs in August.
Ushering in more good news for the sector, President Trump has hinted at creating more jobs and employment. Trump had shown his discontent about moving job outside the U.S. during the election campaign. He said, "I just want to let all of the other companies know that we're going to do great things for business. There's no reason for them to leave anymore.”
Business reports indicate that the two most populated countries, China and India, are together expected to create 300 million placements in the global job market by 2030.
Global Reach: Companies can reach consumers or prospective buyers across the world when Advertising & Market Services and Direct Marketers act on behalf of such firms in informing consumers about new products or added features in existing products. Thus, these service providers help in widening a company’s customer base and maintaining a better retention ratio alongside opening the door to international trade.
A key development in this regard has been noticed in the banking space. Online banking for transfer and collection of money from anywhere in the world, mobile money transfer and ATMs are fast gaining traction. The Western Union Company (NYSE: WU – Free Report) and MoneyGram International Inc. (Nasdaq: MGI – Free Report) are among those that continuously offer cutting-edge services via electronic channels to ensure smooth fund transfers. Fund transferors are also forming alliances with banks and mobile operators to launch their services.
Mobile payment is gaining popularity owing to its convenience and round-the-clock accessibility. We expect this channel will see a faster adoption rate than any other electronic channel. Western Union’s Vigo and OrlandiValuta branded services are available through a network of more than 500,000 agent locations in 200 countries and territories and over 100,000 ATMs.
Importantly, 90% of those locations are outside the U.S. The company plans to add retail locations and more account-based options. MoneyGram has 350,000 agent locations across 200 countries and territories.
A large portion of the world market remains underpenetrated. With the strategic introduction of money transfer in these markets, service providers should enjoy ample business opportunities.
In addition, a continued shift toward electronic forms of payment from paper-based forms has created a dependence on plastic money or debit and credit cards. This has encouraged card processors to ramp up their growth profile. Visa Inc. (NYSE: V – Free Report) and MasterCard Inc. (NYSE: MA – Free Report) are among the companies that are well placed to benefit from the tailwinds, riding on their respective fundamental strengths.
Cost Effective: All business operators prefer to minimize cost of operation and maximize margins. This sector offers cost effectiveness to companies that opt for services that would otherwise be far more expensive.
With specialized services, these providers reduce operational cost and in turn, lower the overall cost of companies. Notably, a higher number of companies opting for such specialized services would increase volumes for service providers. This would eventually lead to services at lower costs and a further reduction in costs for companies, thereby fueling margin expansion.
Our data shows that Business Services margins have consistently grown in the past few quarters, and will likely retain the momentum in the next few quarters too. Importantly, Business Services margin expansion is better than that of the S&P 500 Index.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Zacks Industry Outlook Highlights: Western Union Company, MoneyGram International, Centene, Visa and MasterCard
For Immediate Release
Chicago, IL – September 29, 2017 – Today, Zacks Equity Research discusses the Industry: Business Services, Part 2, including The Western Union Company (NYSE: (WU - Free Report) – Free Report), MoneyGram International Inc. (Nasdaq: – Free Report), Centene Corp. (NYSE: (CNC - Free Report) – Free Report), Visa Inc. (NYSE: (V - Free Report) – Free Report) and MasterCard Inc. (NYSE: (MA - Free Report) – Free Report).
Industry: Business Services, Part 2
Link: https://www.zacks.com/commentary/130080/will-more-job-options-support-business-services-stocks
Stocks in the Business Services sector have been strong performers lately, reflecting the group’s favorable fundamentals, which we have listed below. This should give readers a good sense of the factors that are expected to help these stocks over the near- to medium-term.
Asset-light Business Model: By virtue of the nature of its operations, these companies provide services instead of products to others. This, in turn, frees them from producing goods that would otherwise need manufacturing facilities. As a result, business services do not have inventory or stock, and thus do not have to bear costs for such items.
Moreover, services can be tailor-made for any situation. This is not possible or feasible for something tangible.
Labor Intensive: The sector, which offers intangible products, has immense employment opportunities as it requires both skilled and unskilled labor for its smooth functioning.
Per the Bureau of Labor Statistics, the unemployment rate in August was 4.4%, with non-farm payroll employment increasing nearly 0.2 million in the month. Jobs were added in manufacturing, construction, professional and technical services, health care and mining industries. Unemployment decreased 50 basis points since August 2016. The professional and business service industry added 0.02 million jobs in August.
Ushering in more good news for the sector, President Trump has hinted at creating more jobs and employment. Trump had shown his discontent about moving job outside the U.S. during the election campaign. He said, "I just want to let all of the other companies know that we're going to do great things for business. There's no reason for them to leave anymore.”
Business reports indicate that the two most populated countries, China and India, are together expected to create 300 million placements in the global job market by 2030.
Global Reach: Companies can reach consumers or prospective buyers across the world when Advertising & Market Services and Direct Marketers act on behalf of such firms in informing consumers about new products or added features in existing products. Thus, these service providers help in widening a company’s customer base and maintaining a better retention ratio alongside opening the door to international trade.
A key development in this regard has been noticed in the banking space. Online banking for transfer and collection of money from anywhere in the world, mobile money transfer and ATMs are fast gaining traction. The Western Union Company (NYSE: WU – Free Report) and MoneyGram International Inc. (Nasdaq: MGI – Free Report) are among those that continuously offer cutting-edge services via electronic channels to ensure smooth fund transfers. Fund transferors are also forming alliances with banks and mobile operators to launch their services.
Mobile payment is gaining popularity owing to its convenience and round-the-clock accessibility. We expect this channel will see a faster adoption rate than any other electronic channel. Western Union’s Vigo and OrlandiValuta branded services are available through a network of more than 500,000 agent locations in 200 countries and territories and over 100,000 ATMs.
Importantly, 90% of those locations are outside the U.S. The company plans to add retail locations and more account-based options. MoneyGram has 350,000 agent locations across 200 countries and territories.
A large portion of the world market remains underpenetrated. With the strategic introduction of money transfer in these markets, service providers should enjoy ample business opportunities.
In addition, a continued shift toward electronic forms of payment from paper-based forms has created a dependence on plastic money or debit and credit cards. This has encouraged card processors to ramp up their growth profile. Visa Inc. (NYSE: V – Free Report) and MasterCard Inc. (NYSE: MA – Free Report) are among the companies that are well placed to benefit from the tailwinds, riding on their respective fundamental strengths.
Cost Effective: All business operators prefer to minimize cost of operation and maximize margins. This sector offers cost effectiveness to companies that opt for services that would otherwise be far more expensive.
With specialized services, these providers reduce operational cost and in turn, lower the overall cost of companies. Notably, a higher number of companies opting for such specialized services would increase volumes for service providers. This would eventually lead to services at lower costs and a further reduction in costs for companies, thereby fueling margin expansion.
Our data shows that Business Services margins have consistently grown in the past few quarters, and will likely retain the momentum in the next few quarters too. Importantly, Business Services margin expansion is better than that of the S&P 500 Index.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.
Get the full Report on WU - FREE
Get the full Report on MGI - FREE
Get the full Report on V - FREE
Get the full Report on MA - FREE
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com/
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.