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2 Stocks that May Gain From Job Market Rebound

Stocks in this article: KELYA MAN

By Gene Marcial, DailyFinance

NEW YORK ( DailyFinance) -- How should investors play the challenging but improving job market?

Following the worst labor market downturn in 50 years, with some 8.3 million U.S. jobs lost in 2008 and 2009, the bottom may have finally have been reached. Analysts at Standard & Poor's, for one, believe the worst of the job downturn is over. Both the global and U.S. labor markets, they assert, are in the early stages of a recovery.

After all, in 2010, the U.S. labor market added a net total of 1.1 million jobs -- admittedly still a low number -- but S&P thinks it indicates the worst of the downturn has passed.

That surely spells good news, so some investment pros have been quick to come up with strategies on how to gain from the shifting employment situation. The business services sector, which includes staffing companies that provide permanent as well as temporary help to companies, is bound to be one big beneficiary.

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"The Best Performers Through the Next Cycle"

"With our outlook for continued improvement of the economy and the job market, we believe the staffing stocks will remain a central focal point for investors," says T.C. Robillard, analyst at investment firm Signal Hill Capital group. In this environment, the analyst believes the large staffing-service companies Kelly Services (KELYA) and Manpower (MAN) "will be the best performers through the next cycle." Both Kelly and Manpower did well in 2010 as demand for temporary workers started to pick up.

Kelly places job applicants in a wide range of fields, including finance and accounting, law, education, engineering, health care and information technology. Manpower, on the other hand, is the world's second-largest nongovernment employment services organization. It has about 4,000 offices in 82 countries.

Kelly is S&P's top favorite, and it gives the stock its highest investment recommendation of "strong buy." Kelly's stock has been in an upward swing, closing at $19.50 on Jan. 28 from a 52-week low of $10 hit on Aug. 31, 2010. The strong rally has been propelled by expectations that Kelly will continue to benefit from the pickup in temp hiring as the recovery gets stronger. And more hiring for permanent positions are also expected as the economy gains more ground.

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