Although the U.S. economy has slowed this year, it remains strong – and that's good news for business services stocks that sell products and services to enterprise and government organizations that rely on favorable economic conditions.
The group – which has combined annual sales of about $770 billion, according to business insights firm Dun & Bradstreet – continues to benefit from a mature industry that generates revenue through providing subscription services and charging customer transaction fees in a business world that is becoming ever reliant on information, analytics solutions, and risk management. Performance-wise, the business services sector has added nearly 40% so far in 2019, far outpacing the S&P 500's 23.53% return.
The three business services stocks outlined below set new all-time highs (ATH) Thursday, which may lead to additional gains in subsequent trading sessions. Let's review each issue's quarterly earnings and work through several tactical momentum-based trading ideas.
Fiserv, Inc. (FISV)
Fiserv, Inc. (FISV) provides financial services technology to small and mid-sized banks and credit unions. Its primary offerings include electronic funds transfer, payment processing, and loan processing. The $78.05 billion payments software firm reported a third quarter adjusted profit of $710 million, or $1.02 per share – ahead of Wall Street expectations of $1.00 per share. Revenues for the period came in at $3.13 billion compared to $1.41 billion in the same quarter last year. The company also increased its full-year 2019 guidance to a range of $3.98 to $4.02 from the previous forecast of $3.39 to $3.52. Fiserv stock has gained 55.26% so far this year as of Nov. 15, 2019.
The company's stock has continued its advance higher after breaking out above an ascending triangle on Nov. 7 – the day after the company disclosed its solid quarterly results. In Thursday trading, the share price set an ATH at $114.29, indicating strong upside momentum. Traders who want to ride the move should consider using a fast-period moving average, such as the 10-day simple moving average (SMA), as a trailing stop. Protect against a sudden shift in sentiment by placing a stop-loss order just below the top trendline of the triangle pattern.
IHS Markit Ltd. (INFO)
London-based IHS Markit Ltd. (INFO) provides critical information, analytics, and solutions for corporate clients that operate in various industries and markets. The 60-year-old analytics firm posted third quarter earnings per share of 67 cents to deliver a 16% earnings surprise – its ninth consecutive earnings beat. Revenues of $1.11 billion fell just shy of analyst estimates but grew 11% from the year-ago quarter. Strong contributions from the company's resources segment and an 11% year-over-year (YOY) improvement from reoccurring fixed revenues helped boost the top line. As of Nov. 15, 2019, IHS Markit stock has a market capitalization of $29.08 billion and is up 49.16% year to date (YTD).
Since plunging into bear market territory in December 2018, IHS Markit shares have staged a remarkable recovery throughout 2019, with the price surging to a fresh ATH at $71.59 in yesterday's trading session. Thursday's breakout move also coincides with the moving average convergence divergence (MACD) line crossing above its trigger line to generate a buy signal. Those who decide to take an entry should, once again, use a trailing stop to book profits. Traders could do this by placing an initial stop beneath this month's low and raising the order under each higher trough that forms on the chart.
Global Payments Inc. (GPN)
Global Payments Inc. (GPN) provides payment technology and software solutions for card-, electronic-, check-, and digital-based payments in North America, Europe, and Asia. The Atlanta-based company in September completed a merger with rival payments firm Total System Services, Inc. in a deal worth $21.5 billion. The combined company expects the tie-up to generate $300 million in cost savings and help drive innovative payments and software solutions to combat stiff competition in the space from players like Square, Inc. (SQ) and PayPal Holdings, Inc. (PYPL). On the earnings front, the company delivered a third quarter profit of $1.70 per share, representing a bottom-line increase of 18.1% from the September 2018 quarter. Reported revenues of $1.11 billion surpassed consensus estimates, benefiting from a 16% YOY improvement in North American net sales and network fees. Global Payments stock has a market value of $53.88 billion and is trading up almost 70% on the year as of Nov. 15, 2019. The company also issues an annual dividend of 78 cents per share.
Global Payments share price trended sharply higher between January and July but has oscillated in a sideways trading range over the past three months. Buyers broke the deadlock yesterday, pushing the price above the range's resistance to a new ATH at $177.57. Reasonable volume accompanied the jump, indicating a level of conviction behind the move. Those who take a trade at current levels should think about setting a take-profit order near $200 – determined by measuring the distance of the trading range ($25) and adding it to the breakout point ($175). Close open positions if the stock reverses below $170, as this would suggest a head-fake breakout.