We recently compiled a list of the 12 Best Consulting Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Verisk Analytics, Inc. (NASDAQ:VRSK) stands against the other consulting stocks.
Consulting stocks are shares of publicly traded firms that assist businesses and other organizations by providing advice and expertise.
Despite geopolitical turmoil, economic turbulence, and a flurry of technology breakthroughs affecting business in all sectors in recent years, the consulting industry’s market size has consistently grown. It shows no indications of slowing in 2025.
According to a study report issued by Spherical Insights & Consulting, the global consulting services market was valued at $327.65 billion in 2023 and is expected to reach $494.36 billion by 2033. Regionally, North America is anticipated to have the highest share of the global consulting service market during the forecast period. On the other hand, Asia-Pacific is projected to develop at the quickest rate in the global consulting service market during the forecast period.
According to SPI Research’s Professional Services Maturity Benchmark Report, despite economic volatility, management consultants’ revenue rose by 9% in 2023 YoY, driven mainly by AI, technology, and sustainability services. While global professional services growth slowed to 7.8%, management consulting outperformed the trend.
“The move to implement artificial intelligence in every industry was a key factor driving growth,” SPI stated, citing cloud, cybersecurity, robotics, and business process digitization as significant demand areas. Fee increases helped to offset inflation, with the average billable revenue per consultant climbing to $212,000. Acquisitions also had a role, with individual transactions raising revenue by 8% on average.
Positive signals are emerging from the management consulting industry, with several prominent firms expressing confidence in the market and business prospects for the coming year. Henrik Ringgaard Pedersen, head of Nordic at PA Consulting, believes that resilience advisory, AI integration, and private equity involvement will influence the consulting sector in 2025. He underlines the growing demand for resilience consulting, particularly in financial services, with a heavy emphasis on cybersecurity and IT security. He observes a shift in client expectations, which requires consultants to give specialized expertise rather than generic solutions.
Artificial intelligence remains a top priority, but companies must assist clients in setting reasonable expectations. Pedersen stated the following in this regard:
“We’ve moved from hype to reality, and now it’s about carefully considering how and to what extent AI should be used. The industry will prioritize strategic AI adoption over chasing trends.”
Another trend is rising private equity interest in consulting firms, with potential acquisitions on the horizon. Pedersen sees this as a possible opportunity, noting that some businesses are also looking into new structures to stay relevant. “Securing capital from private equity funds or even being acquired is undoubtedly a growth opportunity,” he commented. In 2021, PA Consulting itself changed ownership from the Carlyle Group to Jacobs, showing the growing internationalization of the consulting industry.
An engineer using the latest predictive analytics software to formulate solutions.
Methodology
We sifted through holdings of consulting services ETFs and online rankings to form an initial list of 20 Consulting stocks. From the resultant dataset, we chose the top 12 stocks most favored by hedge funds, using Insider Monkey’s database of 1,009 hedge funds in Q4 2024 to gauge hedge fund sentiment for stocks. We have used the stock’s Revenue Growth Rate (year-over-year) as a tie-breaker in case two or more stocks have the same number of hedge funds invested.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Verisk Analytics, Inc. (NASDAQ:VRSK)
Number of Hedge Fund Investors: 40
One of the Best Consulting Stocks, Verisk Analytics, Inc. (NASDAQ:VRSK) is the data and analytics powerhouse of the US property and casualty insurance industry. The firm uses a large contributory database and industry contacts dating back to its inception as an insurance provider consortium to develop analytical solutions that improve underwriting and claims results, as well as operating efficiency. Along with a contributory database of over 32 billion standardized insurance transaction records, Verisk has established a proprietary dataset of P&C risks facing over 16 million commercial properties and environmental hazards facing every US postal address. It is also a leader in catastrophe modeling used by insurers, financial institutions, and governments.
Verisk Analytics, Inc. (NASDAQ:VRSK) posted solid fourth-quarter results, exceeding sales growth by 8.62% YoY and earnings projections due to value-based pricing and improved product usage. Strict cost discipline increased margins, strengthening the company’s operational strength. While the 2025 guidance forecasts mid-single-digit revenue growth amidst macroeconomic uncertainties, profitability is likely to improve in the medium term, as per Morningstar analysts. Despite cautious near-term perspective modifications, Verisk remains a high-quality, moaty business with significant intangible assets. The company has the potential for long-term growth through consistent execution and margin expansion.
Verisk Analytics, Inc. (NASDAQ:VRSK) recorded a record free cash flow of $920 million in 2024, up 11% from the previous year. The Board approved a 15% dividend raise and an additional $1 billion in share repurchase authorization.
Overall, VRSK ranks 4th on our list of the Best Consulting Stocks to Buy According to Hedge Funds. While we acknowledge the potential for VRSK as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than VRSK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.