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These hot stocks could surge as the economy sputters

In a continued slow-growth environment, investors should look for outperformance in a hot but little-followed set of stocks: IT services. So says Andrew Burkly, head of institutional portfolio strategy at Oppenheimer.

"We know one of the things that's defining the environment right now is this kind of slow-growth, sluggish-revenue environment that we find ourselves in. So one group in particular that tends to do well in that environment is the IT Services names," Burkly said Monday on CNBC's "Trading Nation."

The strategist highlights companies like Cognizant, Fiserv and Global Payments, which perform services such as data analytics and electronic payment processing.

"These companies tend to do better when the economy's growing but growing slowly — not necessarily in a booming environment," Burkly said. "And these names have done really well this year, and they look pretty attractive to us."

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Indeed, those three stocks have each rallied more than 30 percent in 2015 compared with the S&P 500's gain of just 2 percent. The S&P's revenue growth is set to log its third-straight quarter of year-over-year declines.

Cognizant Technology Solutions office in India.
Madhu Kapparath | Mint | Getty Images
Cognizant Technology Solutions office in India.

David Koning, who covers the space for BMO Capital Markets, said recent growth for IT services companies has been driven by clever acquisitions. But even going forward, he believes the businesses will reap "better-than-economic growth" thanks to a widespread shift to offshore services.

The analyst's favorite pick now? Cognizant, which is set to release earnings before Wednesday's bell. Koning has a $74 price target on the $69 stock.

Disclosure: Burkly does not have any positions in Cognizant, Fiserv or Global Payments; Koning has no personal disclosures.

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Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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