In this article, we will take a look at the 5 best consulting stocks to buy now. To see more such companies, go directly to 13 Best Consulting Stocks to Buy Now.
5. FTI Consulting, Inc. (NYSE:FCN)
Number of Hedge Fund Holders: 38
Management consulting firm FTI Consulting, Inc. (NYSE:FCN) ranks 5th in our list of the best consulting stocks to buy according to hedge funds. FTI Consulting, Inc. (NYSE:FCN) recently posted its first-quarter results, according to which its GAAP EPS in the period came in at $1.34, missing estimates by $0.33. Revenue increased by about 11.5% year over year to reach $806.7 million, beating estimates by $11.26 million.
In its latest earnings call, FTI Consulting, Inc. (NYSE:FCN) talked about its guidance and impact of some important developments on its business. Here’s what FTI Consulting, Inc. (NYSE:FCN) said:
“Despite the weaker-than-expected results in Q1, we are not changing our guidance. Our expectations for the year are shaped by several assumptions, including the following: first, restructuring activity continues to strengthen, both in the United States and overseas, which was reflected in a 6% sequential increase in restructuring revenues compared to 4Q 2022; second, while we expect M&A activity in 2023 to remain slower than in 2022, we expect a pickup from the near record low levels seen in Q1 over the coming quarters, which would positively impact our Economic Consulting and Technology segments and our transactions business in Corporate Finance; third, we expect to recognize certain revenue deferrals in economic consulting in the coming quarters; fourth, we expect momentum to continue to build in our forensic and litigation consulting business.”
4. International Business Machines Corp. (NYSE:IBM)
Number of Hedge Fund Holders: 43
International Business Machines Corp. (NYSE:IBM) has a dedicated business arm for consulting, known as IBM Consulting. The segment includes business transformation, technology consulting and application operations. During the fourth quarter, International Business Machines Corp. (NYSE:IBM)’s tech consulting revenue jumped 10% on a constant currency basis.
43 hedge funds in Insider Monkey’s database of hedge funds have stakes in International Business Machines Corp. (NYSE:IBM) as of the end of the fourth quarter of 2022.
Diamond Hill Long-Short Fund made the following comment about International Business Machines Corporation (NYSE:IBM) in its Q4 2022 investor letter:
“New positions initiated in Q4 included shorts International Business Machines Corporation (NYSE:IBM), Acushnet Holdings (GOLF) and elf Beauty (ELF). Since diversified information technology company IBM’s 2019 acquisition of Red Hat, the company has aggressively pursued a hybrid cloud strategy. Though IBM and its new management team have made solid progress on this pivot, we believe the company still meaningfully lags the cloud hyperscalers and other cloud-native companies. Management has also laid out aggressive long-term targets for revenue growth and free cash flow, both of which we believe the company will struggle to achieve as it faces intense competition in its hybrid cloud business and structural headwinds in the company’s legacy businesses.”
3. Gartner Inc. (NYSE:IT)
Number of Hedge Fund Holders: 44
Gartner Inc. (NYSE:IT) is an authority in the market research industry, providing research reports related to various industries and business areas. Gartner Inc. (NYSE:IT) also offers business consulting services. Earlier this month Gartner Inc. (NYSE:IT) posted its first-quarter results. Adjusted EPS in the quarter came in at $2.88, beating estimates by $0.78. Revenue in the period jumped 11.6% year over year to $1.41 billion, beating estimates by $40 million.
As of the end of the fourth quarter of 2022, 44 hedge funds tracked by Insider Monkey had stakes in Gartner Inc. (NYSE:IT). The biggest stakeholder of Gartner Inc. (NYSE:IT) was David Blood and Al Gore’s Generation Investment Management which owns a $688 million stake.
Baron Asset Fund made the following comment about Gartner, Inc. (NYSE:IT) in its Q1 2023 investor letter:
“After meaningfully increasing last year, shares of Gartner, Inc. (NYSE:IT), a provider of syndicated research primarily on the IT sector, ceded some gains in the quarter. Gartner’s business conditions have likely softened modestly, as the company’s technology vendor customer base has been negatively impacted by layoffs and cost reductions across that sector. Despite this headwind, Gartner is generating attractive double-digit growth in its largely recurring research business. We believe Gartner should benefit from the ongoing ubiquity and complexity of technology facing nearly all types of businesses. We expect sustained revenue growth and renewed focus on cost control to drive margin expansion and enhanced free-cash-flow generation. The company’s balance sheet is in excellent shape and can support ongoing repurchases and potential bolt-on acquisitions, in our view.”
2. Marsh & McLennan Companies, Inc. (NYSE:MMC)
Number of Hedge Fund Holders: 52
Professional services company Marsh & McLennan Companies, Inc. (NYSE:MMC) owns Oliver Wyman, one of the notable management consulting firms in the US. Marsh & McLennan Companies, Inc. (NYSE:MMC) is experiencing solid revenue growth as companies turn to their consulting services to find ways to weather the current economic uncertainty. During its Q4 earnings call, Marsh & McLennan Companies, Inc. (NYSE:MMC) said that while the company’s Consulting segment expanded, it saw some “moderation” in growth as it is vulnerable to the global macro environment where companies are slashing their budgets.
Here’s what Marsh & McLennan Companies, Inc. (NYSE:MMC) said:
“Oliver Wyman’s revenue in the fourth quarter was $765 million, an increase of 8% on an underlying basis, a solid result considering a tough comparison to 22% growth in the fourth quarter of 2021. For the full year, Oliver Wyman’s revenue was $2.8 billion, an increase of 13% on an underlying basis, building on the 21% growth in 2021. As we look to 2023, we expect growth at Oliver Wyman to slow given rising economic uncertainty. Adjusted corporate expense was $68 million in the quarter.”
1. Accenture Plc (NYSE:ACN)
Number of Hedge Fund Holders: 63
Accenture Plc (NYSE:ACN) is one of the biggest IT consulting companies in the world. Accenture Plc (NYSE:ACN)’s operates two primary business divisions: consulting and outsourcing. For the fiscal year ending on August 31, 2022, the consulting division accounted for $34.1 billion of Accenture Plc (NYSE:ACN)’s total revenue of $61.6 billion.
As of the end of the fourth quarter of 2022, 63 hedge funds in Insider Monkey’s database of 943 hedge funds held stakes in Accenture Plc (NYSE:ACN). The most significant stake in Accenture Plc (NYSE:ACN) was owned by Guardian Capital’s GuardCap Asset Management which owns a $387 million stake in the company.
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