The business services sector benefited from economic strength and stability, and robust service activities in 2019. It remained buoyed by a strong labor market and low unemployment and inflation.
Further, the sector remained less affected by trade tensions as business services firms have lower foreign exposure compared to goods companies and incur lower foreign input costs
Copart Performed Impressively in 2019
Copart, Inc. CPRT has been an outstanding business services stock this year. It returned a whopping 90.2% over the year, significantly outperforming the sector’s 34.5% rally and the Zacks S&P 500 composite’s 30.8% upside.
The company’s impressive run can be attributed to consistent top- and bottom-line performance. It surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average positive surprise being 6.4%. Copart also recorded significant top- and bottom-line year-over-year growth in these quarters.
These results were driven by strong global presence and continued expansion efforts. Copart’s active presence across U.S. and international markets is keeping worldwide sales volumes strong. High activity levels in the United States and expansion efforts in Canadian and European markets are aiding its revenues.
During fiscal first-quarter 2020, the company made an expansion of 40 acres in its Atlanta East location. It also announced an expansion of location in Calgary and Montreal by 20 acres and 24 acres, respectively.
The company’s strategic acquisitions are also benefiting its top line. Copart’s buyout of Kentucky-based online auctioning platform, Vincent Auto Solutions, has strengthened its footprint in western Kentucky and is likely to have contributed to sales in the quarter to be reported.
The Business Services Sector in 2020
The service sector is a major beneficiary of a favorable economy, which is expected to get stronger in 2020, especially because trade tensions are likely to ease. The United States is going for deals with its trading partners. The initial phase of a trade deal with China will be signed in the first week of January. Recently, in a positive gesture to Washington, Beijing waived import tariffs on some U.S. soybean and pork shipment.
Further, with job growth soaring, unemployment is at a 50-year low and is likely to decrease further. With wages rising and household income at the highest level in 20 years, consumer sentiment is likely to remain high. Moreover, factory production is rebounding and domestic homebuilding market is taking off, adding to the optimism.
4 Stocks Poised to be the Copart of 2020
Based on a favorable Zacks Rank #1 (Strong Buy) or 2 (Buy), we have zoomed in on four business services stocks, which should be added to one’s portfolio for handsome returns in 2020. You can see the complete list of today’s Zacks #1 Rank stocks here.
Everi Holdings Inc. EVRI:Thistechnology solutions provider to the casino gaming industry sports a Zacks Rank #1. The Zacks Consensus Estimate for 2020 earnings has been revised 14% upward in the past 60 days. Shares of the company have soared more than 100% over the past year.
Cross Country Healthcare, Inc. CCRN: This healthcare staffing, recruiting, and workforce solutions provider also carries a Zacks Rank #1. The Zacks Consensus Estimate for 2020 earnings has been revised 33.3% upward in the past 60 days. Shares of the company have soared 57% over the past year.
Luna Innovations Incorporated LUNA: This fiber optic sensing, and test and measurement products provider carries a Zacks Rank #2. The Zacks Consensus Estimate for 2020 earnings has increased 15.8% in the past 60 days. Shares of the company gained more than 100% over the past year.
Accenture plc ACN: The consulting and outsourcing giant carries a Zacks Rank #2. The Zacks Consensus Estimate for fiscal earnings has been revised 0.7% upward in the past 60 days. Shares of the company have gained 51.2% in the past year.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2020?
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Everi Holdings Inc. (EVRI): Free Stock Analysis Report
Accenture PLC (ACN): Free Stock Analysis Report
Cross Country Healthcare, Inc. (CCRN): Free Stock Analysis Report
Copart, Inc. (CPRT): Free Stock Analysis Report
Luna Innovations Incorporated (LUNA): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.