Business services providers thrive by solving complex operational challenges for their clients, allowing them to focus on their secret sauce. But cutbacks in corporate spending and the threat of new AI products have kept sentiment in check, and over the past six months, the industry has tumbled by 2.3%. This performance mirrored the S&P 500’s decline.

Investors should tread carefully as many of these companies are also cyclical, and any misstep can have you catching a falling knife. On that note, here are three services stocks best left ignored.

Vestis (VSTS)

Market Cap: $1.34 billion

Operating a network of more than 350 facilities with 3,300 delivery routes serving customers weekly, Vestis (NYSE:VSTS) provides uniform rentals, workplace supplies, and facility services to over 300,000 business locations across the United States and Canada.

Why Do We Think VSTS Will Underperform?

1. Sales stagnated over the last two years and signal the need for new growth strategies

2. Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 2.5%

3. Earnings per share have dipped by 39.9% annually over the past two years, which is concerning because stock prices follow EPS over the long term

Vestis is trading at $10.22 per share, or 14.3x forward price-to-earnings. To fully understand why you should be careful with VSTS, check out our full research report (it’s free) .

Interface (TILE)

Market Cap: $1.15 billion

Pioneering carbon-neutral flooring since its founding in 1973, Interface (NASDAQ:TILE) is a global manufacturer of modular carpet tiles, luxury vinyl tile (LVT), and rubber flooring that specializes in carbon-neutral and sustainable flooring solutions.

Why Should You Sell TILE?

1. Flat sales over the last five years suggest it must find different ways to grow during this cycle

2. Issuance of new shares over the last five years caused its earnings per share to fall by 16% annually

3. Low returns on capital reflect management’s struggle to allocate funds effectively

At $19.54 per share, Interface trades at 13.3x forward price-to-earnings. If you’re considering TILE for your portfolio, see our FREE research report to learn more .

HP (HPQ)

Market Cap: $26.88 billion

Born from the legendary Silicon Valley garage startup founded by Bill Hewlett and Dave Packard in 1939, HP (NYSE:HPQ) designs and sells personal computers, printers, and related technology products and services to consumers, businesses, and enterprises worldwide.

Why Do We Pass on HPQ?

1. Sales tumbled by 1.7% annually over the last five years, showing market trends are working against its favor during this cycle

2. Anticipated sales growth of 3.5% for the next year implies demand will be shaky

3. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term