The Zacks Analyst Blog Highlights: NV5 Global, Insperity, Vectrus and Convergys
Zacks Equity Research
Updated
For Immediate Release
Chicago, IL – April 07, 2016 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include NV5 Global, Inc. (NVEE), Insperity, Inc. (NSP), Vectrus, Inc. (VEC) and Convergys Corporation (CVG).
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Here are highlights from Wednesday’s Analyst Blog:
4 Top-Ranked Stocks to Buy as Services Sector Expands
Fresh data released on Tuesday showed that the U.S. services sector expanded at its fastest pace in three months. Another indicator that the U.S. economy was defying global economic turmoil, this report came as welcome news to both investors and the Federal Reserve. Recently, the Fed expressed concerns about how global factors could impact the U.S. economy.
The new report means that the services sector is in fine fettle and represents a good investment option. Picking stocks from the sector could be a prudent option at this point in time.
Index Reaches Three-Month High
The ISM Services Index increased from 53.4% in February to 54.5% in March. This was its highest reading in three months. A reading above 50 indicates that most industries within the sector are expanding. Of the 18 major industries, 12 expanded in March. The new orders index moved up 1.2 points to 56.7%.
Employment returned to the black, increasing 0.6 points to 50.3%. This is especially significant since it had moved down in February, the first such occurrence in two years. Meanwhile, a Markit survey depicted an expansion in the services sector in March. The Market services index recovered from a three-year low of 49.7 to 51.3 in March.
Employment Gains from Services Growth
Services make up nearly 80% of U.S. GDP and employ nearly a similar share of its workforce. Non-farm payrolls grew by 215,000 in March, beating the consensus estimate of 203,000. In contrast to February’s 0.1% decline, the average hourly earnings gained 0.3% in March to $25.39 per hour, in line with the consensus estimate.
While manufacturing and mining jobs declined, other sectors added a substantial number of jobs. A lion’s share of job growth came from services. In March, professional and business services added 33,000 jobs, increasing from February’s figure of 30,000. More significantly, the industry added an average of 52,000 jobs per month during 2015.
Our Choices
A substantial expansion in the services sector indicates that its attractiveness as an investment option is improving. Additionally, GDP and employment data have improved, gaining from the sector’s strength.
This is why it makes good sense to add stocks from this sector to your portfolio. However, it is crucial to pick winning stocks in order to reap maximum gains.
This is where our VGM score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score.
We have narrowed down our search to the following stocks based on a good Zacks Rank and VGM score.
NV5 Global, Inc. (NVEE) offers professional and technical engineering and consulting solutions for public and private sector.
NV5 Global has a Zacks Rank #1 (Strong Buy) and a VGM Score of A. The company has expected earnings growth of 23.1% for the current year. The forward price-to-earnings (P/E) ratio for the current financial year (F1) is 14.78, which is lower than the industry average of 18.51. Its earnings estimate for the current year has improved by 28% over the last 30 days.
Insperity, Inc. (NSP) is engaged in providing a range of human resources and business solutions.
Insperity has a Zacks Rank #1 and a VGM Score of A. The company has expected earnings growth of 53.8% for the current year. Its earnings estimate for the current year has improved by 30.3% over the last 30 days.
Vectrus, Inc. (VEC) engages in providing infrastructure asset management, information technology and network communication services, and logistics and supply chain management to the U.S. government on a global scale.
Vectrus has a Zacks Rank #1 and a VGM Score of A. It has a P/E (F1) of 9.95, which is lower than the industry average of 24.86. Its earnings estimate for the current year has improved by 9.3% over the last 30 days.
Convergys Corporation (CVG) is one of the global leaders in the provision of outsourced, integrated billing and customer care services.
Convergys has a Zacks Rank #1 and a VGM Score of B. The company has expected earnings growth of 7.7% for the current year. It has a P/E (F1) of 14.12, which is lower than the industry average of 17.05. Its earnings estimate for the current year has improved by 1.3% over the last 30 days.
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