Use the Jobs Report as a Stock Screen

The unemployment rate rose from 4.8 to 5.1% in March, and nonfarm payroll employment continued to trend down (-80,000), the Bureau of Labor Statistics of the U.S. Department of Labor reported. Over the past three months, payroll employment declined by 232,000.

On a year-over-year basis, total employment grew a meager 0.4%. If we get four more months at the current trend rate, and we'll be talking about year-over-year job losses.

Click here for larger image.

Source: Bureau of Labor Statistics

Still, the data are the data. As investors, we can either fret about the report or sift through it for investment ideas. With that in mind, I looked at the table presenting the industries that are doing the most hiring. Whoever is growing and hiring in this environment may be worth a further look.

The highest change in employment, 23.4%, came in the "food services and drinking places" industry. While critics may complain that those are low-paying jobs, they nonetheless show that an investable industry is expanding.

According to a Zacks Research Wizard query, six publicly traded restaurant chains with market capitalization above $500 million grew 20% or more over the last 12 months. They are:

• IHOP (IHP - commentary - Cramer's Take)
• Chipotle Mexican Grill (CMG - commentary - Cramer's Take)
• Panera Bread (PNRA - commentary - Cramer's Take)
• Red Robin Gourmet Burgers (RRGB - commentary - Cramer's Take)
• Texas Roadhouse (TXRH - commentary - Cramer's Take)
• Starbucks (SBUX - commentary - Cramer's Take)

Checking Into Hospitals

Hospitals were the second-fastest job growth industry at 13.7%, and job growth in this area passed statistical significance tests. Potential research candidates here include:

• Community Health (CYH - commentary - Cramer's Take)
• Universal Health (UHS - commentary - Cramer's Take)
• Lifepoint (LPNT - commentary - Cramer's Take)

Unfortunately, some of the other fast growers are government-related and not investable. One area that had statistically significant growth was "support activities for mining." Unfortunately, the closest thing to that that I could find was Minefinders (MFN - commentary - Cramer's Take), which is fairly small.

However, combining the mining theme with the next-fastest grower led to some potentially promising manufacturers of mining machinery. These include:

• Bucyrus International (BUCY - commentary - Cramer's Take)
• Astec Industries (ASTE - commentary - Cramer's Take)
• Terex (TEX - commentary - Cramer's Take)
• Joy Global (JOYG - commentary - Cramer's Take)
• Manitowoc (MTW - commentary - Cramer's Take)

The only other industries showing statistically significant job growth were oil and gas extraction and the unhelpful category of "other information services." Focusing on the former, potential plays include:

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At the time of publication, Trent was long Starbucks, although positions may change at any time.

William A. Trent, CFA, is a freelance equity analyst based in the New York metro area. He has been an equity analyst since 1996 and is co-author of Understanding and Evaluating Prospectuses, Offering Documents, and Proxy Statements. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Trent appreciates your feedback; click here to send him an email.