With Civeo Down More Than 50 Percent; Are There Better Options In the Business Services Industry?

Civeo Corp CVEO is down more than 50 percent on Tuesday, following a lowered outlook for 2015 and the suspension of its dividend policy. These events were triggered by lower oil prices.

What Do Oil Prices Have To Do With Civeo?

Although Civeo is not directly involved in the oil industry, its business depends on it. The company offers housing (accommodation and food services) for oil workers in the U.S., Canada and Australia. So, as oil companies continue to cut their capital spending plans for 2015 (as a response to the weak oil environment), the firm is seeing demand for its services fall substantially.

Having lost more 80 percent since it began trading publicly in June, the stock does not look particularly appealing. Although some might see an attractive entry point open, with the stock trading at 0.7 times the company’s book values, we’d rather take a look at some other business services companies with more promising prospects.

FleetCor Technologies

FleetCor Technologies, Inc. FLT is amongst analysts’ favorites in the industry. This fuel cards and workforce payment products and services provider received positive ratings from five different Wall Street research firms over the fourth quarter.

Most recently, on December 23, Barclays issued an Overweight recommendation and a $170 price target. Earlier this month, Deutsche Bank initiated coverage on the stock with a Buy rating and a $178 price target.

Over the quarter, Jefferies and Citigroup recommended Buying the stock, setting price targets of $177 and $164, respectively (on November 12 and October 31, correspondingly), Morgan Stanley rated the stock as an Overweight case.

The stock currently trades around $149 so, as you might have noticed, the upside potential seems to be plenty.

Some Other Options To Look Into

In case you don’t like FleetCor, here’s some other interesting options to look into in the business services industry:

- IHS Inc. IHS: although analysts are not huge fans, most of them see some upside potential in the stock. On December 30, Barclays issued an Equal-weight rating accompanied by a $128 price target (up from the current $115.50 per share). About a week before that, Credit Suisse reiterated its Neutral rating, and set a price target of $138.

- Fiserv, Inc. FISV: Barclays and Jefferies see Fiserv going up. On November, the former issued a Buy rating and a $79 price target, while the latter gave it an Equal-weight, escorted by a $77 price target.

The stock currently trades slightly below $72.