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Why Should You Retain Genpact Limited (G) in Your Portfolio?

Zacks

A prudent investment decision involves buying stocks that have solid prospects and selling those that carry risks. At times, it is rational to hold certain stocks that have enough potential but are weighed down by tough market conditions.

Here we discuss about Genpact G, a stock that has rallied 12.3% over the past year. The company has expected long-term earnings per share growth rate of 10%.

We believe strong prospects in the artificial intelligence (AI) space and strategic acquisitions bode well for the company.


Let’s delve deeper in to these key factors.

Very Active on the Acquisition Font

Acquisition is a key growth strategy for Genpact. We believe, buyouts of TandemSeven, BrightClaim and Rage Frameworks in 2017 are helping the company to expand product portfolio and gain new domain expertise.

The addition of TandemSeven’s core design thinking process to Genpact’s AI platform is helping Genpact become more customer-oriented company. Acquisition of BrightClaim and their associated company, National Vendor, should also strengthen Genpact’s insurance claims management expertise. Rage Frameworks buyout expanded Genpact’s capability to provide AI offerings across industries, such as consumer packaged goods, industrial engineering, life-sciences and high-tech.

Genpact’s other notable acquisitions include LeaseDimensions, Endeavour Software, Strategic Sourcing Excellence (SSE), PNMSoft Limited, Hitachi Management and Pharmalink Consulting. These buyouts have helped the company in expanding presence in mobile technology, dynamic workflow solution, life sciences and banking operations. These, in turn, have driven customer base and top-line growth.

Artificial Intelligence Offering Significant Growth Opportunities

Per an IDC report, worldwide spending on cognitive systems and AI is estimated to touch $52.2 billion in 2021 witnessing a CAGR of 46.2%. We believe that Genpact is well positioned to take advantage of the projected improvement in the AI space.

The company recently launched Genpact Cora — an automation to AI-based platform that combines its proprietary automation, analytics, and AI technologies into a single common platform. This latest platform has a modular, interconnected network of technologies that enables clients to better tackle specific operational business challenges.

Genpact Cora is helping the company to provide related offerings to industries like consumer-packaged goods, industrial engineering, life sciences and high tech. Acquisitions of Rage Framework and design thinking based companies, like Tandem Seven have also expanded the company’s AI product portfolio.

Zacks Rank and Other Stocks to Consider

Genpact currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the broader Business Services sector are Mastercard Inc. MA, FLEETCOR Technologies, Inc. FLT and WEX Inc. WEX. While Mastercard and WEX sport a Zacks Rank #1 (Strong Buy), FLEETCOR Technologies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term expected earnings per share growth rate for Mastercard, FLEETCOR Technologies and WEX is 19%, 16.5% and 14.3%, respectively.

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