Outsourcing Picks: Better Digital Ops, And Fast

The 18-company-strong Outsourcing industry is hot these days.

It is ranked #3 out of 265 Zacks industries. In the last week alone, covering analysts made 5 positive earnings estimate revisions and 0 negative revisions.

In previous weeks, this ranking was #52 and #32 and #28. That tells you. The recent jump in rankings is from a strong rank to something even better.

When a group of stocks are on a momentum run -- which is the earnings estimate revisions’ fuel -- they keep the stock price fire burning to new heights.

Nowadays, we hear lots about outsourcing in the business world. Why?

A CIO magazine article published on July 19, 2017 gave us a few good reasons.The days of low-cost commodity services are waning, as IT organizations seek stronger strategic partnerships with IT outsourcing providers -- in an era of digital transformation.

(1) “Digital transformation is driving demand away from compartmentalization and silos of service delivery, and toward frictionless integration,” says David J. Brown, global head of KPMG’s Shared Services and Outsourcing Advisory.

(2) Enterprises are moving more workloads to the public cloud, but continuing to run certain applications in dedicated private cloud environments for security, regulatory or competitive reasons.

“So they’re looking for providers that can seamlessly manage and integrate their hybrid cloud environments,” says Rahul Singh, managing director with business transformation and outsourcing consultancy Pace Harmon.

(3) “Organizations are rapidly transforming to agile enterprises that require rapid development cycles and close coordination between business, engineering and operations,” said Steve Hall, a partner with sourcing consultancy Information Services Group (ISG).

“Global delivery requires a globally distributed agile process to balance the need for speed and current cost pressures.”

Here Are 3 Top Zacks Picks to Play the Trend--

(1) The Brink’s Company (BCO): This is a Zacks #1 Rank (STRONG BUY) stock with a long-term VGM score of B, based on a B in Value and an A in Growth.

The market cap is $3.8 billion. The Forward P/E is 25.13 (S&P 500 is at 18.57) and the stock trades at $76 a share. This stock is on a big momentum run, up +85% YTD.

The average of the last 4 earnings surprises is +23%. It reports again on Oct. 25^th.

The Brink's Company is a global leader in business and security services. Their three main businesses are Brink's, Inc., the world's premier provider of secure transportation and cash management services; Brink's Home Security, one of the largest and most successful residential alarm companies in North America; and BAX Global, an industry leader in global supply chain management.

(2) Broadridge Financial Solutions (BR): This is a Zacks #1 Rank (STRONG BUY) stock with a long-term VGM score of A, based on an A in Growth.

The market cap is $8.9 billion. The Forward P/E is 20.96 and the stock trades at $77 a share. The YTD price change is +15.5%.

The average of the last 4 earnings surprises is +3.6%. It reports again on Nov. 8^th.

Broadridge is a leading global provider of technology-based outsourcing solutions to the financial services industry. Their integrated systems and services include investor communication, securities processing, and clearing and outsourcing solutions.

Broadridge offers a broad, integrated suite of innovative global solutions across the investment lifecycle and provides a wide range of cost-effective and scalable solutions to the financial industry. Their systems help reduce the need for clients to make significant capital investments in operations infrastructure, thereby allowing them to increase their focus on core business activities.

(3) TriNet Group (TNET): This is a Zacks #1 Rank (STRONG BUY) stock with a long-term VGM score of C, with a B in Growth.

The market cap is $2.4 billion. The Forward P/E is 23.71 and the stock trades at $35 a share. The YTD price change is +37%.

The average of the last 4 earnings surprises is +37%. It reports again on Nov. 8^th.

TriNet Group, Inc. is a provider of a comprehensive human resources solution for small to medium-sized businesses. It offers payroll, tax administration, risk protection, performance management, compensation consulting and employee benefit plans.

The Company serves banking and financial services, biotech and life sciences, technology, non-profits, professional services, venture capital, and advertising and marketing industries.

TriNet Group, Inc. is headquartered in San Leandro, California.