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Top 4 Staffing Stocks for an Improving Economy

Top 4 Staffing Stocks for an Improving Economy

We all know someone who has been stuck in a job they dislike but, due to a weak economy, has had little choice but to suck it up and stay put. Not anymore. The U.S. economy has suddenly shifted into a higher gear, and "help wanted" signs are popping up at many more companies. As a result, many workers will soon start to sniff around, seeing if they can land a better job elsewhere.

That's great news for staffing firms. From executive recruitment firms to temporary staffing agencies, the whole industry should benefit.

To get a handle on Friday's jobs report and what it means for future gains, you need to look back at historical patterns. In the early 1990s, after companies laid off many employees, they froze hiring. It wasn't until early 1993 that more than 200,000 jobs were being created on a monthly basis. But the hiring upturn created a virtuous cycle as companies scrambled to hire talent before rivals could snatch them away. As a result, non-farm payrolls grew by more than 200,000 per month for much of the next six years.

Are we on the cusp of a sustained jobs boom? It's too soon to tell, but if we see another 200,000 jobs created in each of the next few months, then a clear trend will have been established.

Here are some names that may benefit.

Robert Half International

Thanks to a focus on professional staffing, especially in IT, Robert Half International (RHI) never took a deep hit from the economic slowdown as companies preserved spending on hard-to-replace technology staffers. As a result, sales rose from $3.2 billion in 2010 to $3.8 billion in 2011.

Still, that's well below the $4.6 billion in sales that Robert Half took in back in 2006 and 2007. EPS of around $1 in 2011 is roughly half of what the company earned a half-decade ago.

Might Friday's jobs report be putting Robert Half on a path back to peak performance? Well, the national unemployment rate would need to move below 7% for that to happen, as that is when job-hopping really kicks in.

In addition to its exposure to the IT field, Robert Half has a strong reputation among accounting and finance clients. The company maintains a strong network of relationships with existing professionals, and can offer prospective employers a wide range of choices.

"Knowing that Robert Half has a quality supply of resources, employers often use it as the vendor of choice for their staffing needs. These factors feed upon each other to create one of the most formidable job networks and narrow economic moats in the staffing industry," note analysts at Morningstar.

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