Outsourcing Industry Momentum Continues: 4 Stocks In Focus

The Outsourcing industry has outpaced the S&P 500 Index so far this year. The industry, which is placed in the top 43% of more than the 250 Zacks industries, has rallied 29.1% in the said time frame, surpassing the index’s rise of 18.7%. The outperformance can be attributed to increasing demand for expertise in improving efficiency and lowering costs.

Economic Strength Keeps Demand Environment Strong

Economic strength has kept manufacturing and non-manufacturing activities in good shape, thus keeping the demand environment for outsourcing services strong. June marked the 34^th month of consecutive manufacturing growth with the Purchasing Managers' Index, measured by Institute of Supply Management (ISM), touching 51.7%. Also, June was the 113th month of consecutive growth in non-manufacturing activities with ISM-measured Non-Manufacturing Index touching 55.1%.

Emerging Technologies to Improve Speed to Market

Most of the industry participants are considering emerging technologies such as cloud computing and robotic process automation to drive competitive advantage. This should help increase innovation, improve speed to market and drive performance within the industry. The industry should witness increased transparency on a global scale as several companies are expected to adopt transparent policies.

4 Stocks on Investors’ Radar

The outsourcing industry comprises companies that offer information technology, payroll, human resource, retirement and insurance services, business management solutions and business process outsourcing for small and mid-sized companies in the United States and abroad.

Below, we have mentioned four stocks that are benefiting from sustained growth in the industry.

TriNet Group, Inc. (NYSE:TNET) , a provider of human resources solutions for small and midsize businesses, carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The expected earnings growth rate for the current year is 12.3%. Shares have gained a massive 70.9% year to date.

Broadridge Financial Solutions, Inc. (NYSE:BR) , a provider of investor communications and technology-driven solutions, also carries a Zacks Rank #2. The expected earnings growth for the current fiscal year is 11%. The stock has gained 37.8% year to date.

Business process outsourcing giant Genpact Limited (NYSE:G) carries a Zacks Rank #3 (Hold). The expected earnings growth rate for the current year is 11.1%. The stock has gained a massive 43.1% year to date.

Barrett Business Services, Inc. (NASDAQ:BBSI) , a provider of business management solutions for small and mid-sized companies, also carries a Zacks Rank #3. The expected earnings growth rate for the current year is 10.4%. Shares have gained a massive 49.5% year to date.

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