Bernstein Highlights Waste Connections, Ferguson as Top Business Services Picks

Analysts at Bernstein have singled out their top investment ideas in the U.S. business services sector, favoring companies with strong pricing power and recurring revenue. The firm highlighted Waste Connections and Ferguson as having compelling risk-reward profiles, even as most companies in the sector trade at premium valuations compared to the S&P 500.

Waste Connections: A 'Compelling Opportunity'

Bernstein rated Waste Connections (WCN) as Outperform with a $205 price target, calling it the highest-quality solid waste operator in its coverage. The firm pointed to the company's industry-leading margins and disciplined M&A strategy, which are supported by its focus on rural and secondary markets with exclusive municipal contracts.

Analysts noted that Waste Connections' stock has de-rated, shedding its historical 30% valuation premium to now trade at parity with peers like Waste Management. Bernstein attributes this to the Chiquita Canyon Landfill issue, which it views as a transitory problem. The firm estimates cleanup costs will be below $2 billion, significantly less than the $12 billion in market value the company has lost relative to its peers, creating what Bernstein sees as a compelling entry point for investors.

Ferguson Positioned for Data Center Boom

Ferguson (FERG) also received an Outperform rating with a $310 price target. Bernstein sees the distributor as uniquely positioned to benefit from the anticipated $1.5 trillion to $1.8 trillion U.S. data center construction boom. The company holds a leading market share of 23-26% across key categories like waterworks and commercial mechanical systems.

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The firm believes Ferguson will capture significant spending as the industry increasingly adopts liquid-based cooling systems, which are projected to be used in approximately 60% of new data centers by 2028. This outlook is supported by Ferguson management's decision in February 2026 to increase its total addressable market estimate for large capital projects to $90 billion.

Cintas: Quality Compounder Facing Hurdles

In contrast, Bernstein assigned Cintas (CTAS) a Market-Perform rating with a $200 price target. While acknowledging Cintas as a "quality compounder" that has grown sales and profits in 53 of the last 55 years, the firm expressed near-term caution.

The primary concern is the high degree of uncertainty surrounding its pending acquisition of UniFirst. The deal is facing a second request for information from the Federal Trade Commission (FTC). Although Bernstein believes $375 million in cost synergies are achievable, the regulatory hurdles and longer-term questions about the company's total addressable market led to the more neutral rating.