This $80B Industry Is Evolving — Target Double-Digit Gains Now

Original post

The coronavirus pandemic has transformed how business is done.

But it’s also put pressure on several industries to trim costs or outsource.

Namely, businesses are outsourcing customer service.

It’s an essential part of the customer experience for every industry — from health care to retail.

But companies are trying to limit the number of employees coming into offices or stores because of social distancing. Moving customer service out is an easy way to achieve that.

Using Money & Markets Chief Investment Strategist Adam O’Dell’s Green Zone Ratings system, we found a strong customer service stock. This company provides customer service tools to other entities.

I’ll get to that shortly.

But first, I’ll explain what businesses are doing to improve the customer experience.

More Businesses Outsource Customer Service

Customer service is a multibillion-dollar industry.

Businesses go to great lengths to make sure customers have different ways to address issues with services and products.

But in tough economic times, maintaining all those avenues can be an expensive proposition.

That’s why more businesses are outsourcing their customer relations to third-party companies that are better equipped to handle calls, emails and live chats.

Businesses Increase Outsourcing of Customer Service

As you can see, from 2015 to the end of 2020, businesses are spending 25% more on outsourced customer service companies.

And we’ve found a customer service stock poised to take full advantage of that increase. It should provide investors with steady gains over the next 12 to 36 months.

This Customer Service Stock Is Ready to Boom

Not only is this customer service company a leader in the field, but it continues to grow.

Sykes Enterprises Inc. (Nasdaq: SYKE) provides customer engagement services across industries from health care to retail. These include billing inquiries and complaint resolution.

Sykes uses phone, email, social media and chat to facilitate that engagement.

The company operates 72 locations across 23 countries.

Sykes Enterprises Stock Jumps 19% in a Year

customer service stock Syke Enterprises stock

On August 3, Sykes released its quarterly earnings data. It reported earnings per share of $0.71 — beating Wall Street expectations by $0.49. Its net revenue moved up 7.1% compared to the same quarter a year ago.

Sykes rates a 98 on Adam’s Green Zone Rating system — meaning only 2% of all other rated stocks are better. It rated highest on value, quality, size and growth.

Here’s what a deeper dive into Sykes uncovered:

  • Value — Sykes rated a 94 on overall value. It has great price-to-cash flow, price-to-sales and price-to-earnings, especially compared to the rest of the professional services industry.

Sykes Enterprises stock value

  • Quality — Along with being a high-value customer service stock, Sykes is also high-quality — rating a 92 on this metric. The company has a strong cash flow position along with positive returns on investment, equity and assets. (The industry average is negative in all three).

Sykes Enterprises stock quality

  • Size — Adam and I know that smaller companies have a better chance at returning higher gains for investors. Sykes rates a 75 on size — only 25% of all other stocks rated higher.

Sykes Enterprises stock size

  • Growth — The company rated a 75 on growth. Its one-year annual growth rate on earnings per share is a stellar 48%. Sykes also has trailing 12-month income of $77 million.

growth

All of this, plus a strong quarterly earnings report, led analysts to increase their price target for Sykes to between $37 and $40 per share.

Hitting the high end of that will give investors like us a double-digit gain on this customer service leader in the next 12-18 months.

What to Do With Sykes Enterprises Stock

Customer service remains an essential tool for businesses.

That’s even more true today with contactless shopping and health care.

More businesses are outsourcing their customer service to handle the higher demand and to offer better experiences.

Sykes Enterprises Inc. is one of the industry’s best when it comes to providing customer service tools for businesses in every sector.

And because of the increase in outsourcing, the company that will surely be looked upon to provide businesses those important tools.

The bottom line: Sykes Enterprises will leverage its position as a customer service leader for continued growth. You should take advantage of the trend to see double-digit gains in your investment with this customer service stock.

Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.

The post This $80B Industry Is Evolving — Target Double-Digit Gains Now appeared first on Money & Markets.