This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

EmergingGrowth.com Special Report Kforce, Inc. Emerging Growth Short Side Stock Pick

Stocks in this article: AFCFSLRGMCRGMEJCPKFRC

MIAMI, January 3, 2013 /PRNewswire/ --

EmergingGrowth.com, a leading digital financial media company, Reports on Short Side Stock Pick Kforce, Inc.

Feature your company on EmergingGrowth.com. Visit EmergingGrowth.com to find out how.  

When investing in the markets folks have to be conscious of the upside potential of a security, and at the same time be able to accept when a stock becomes overvalued. This is generally a difficult skill to acquire as most folks look to invest in a company for the long-term, hoping for appreciation over time. The retail investor who invests through their 401ks and other defined contribution plans all buy and hope the fund will be worth more in the future. The more astute investor and a bunch of hedge fund managers not only look for hidden gems, but also invest (in other ways) their capital in companies that are overvalued.  

David Einhorn, founder and president of Greenlight Capital has initiated a bunch of short positions such as Allied Capital (NYSE: AFC), Lehman Brothers and Green Mountain Coffee Roasters (NASDAQ: GMCR). The press usually pegs him as a "destroyer of companies," but most of the time he is correct that the company's stock is overpriced. When evaluating financial statements and looking at the company's core operations and products, many managers believe they can gauge whether future earnings are correctly priced into the stock. When a company has an earnings potential shortfall or has a stock price that has run up too far too fast, many managers will short the company's stock. This seems to be the case with Kforce.

Kforce Inc (NASDAQ: KFRC) provides professional and technical staffing services and solutions in the United States. It operates in five segments: Technology, Finance and Accounting, Clinical Research, Health Information Management, and Government Solutions. The stock is trading just above $14.50 a share, with a 52-week range of $9.57 to $14.92. The company recently hit its 52-week high of $14.92 on December 28, and pulled back slightly. Less than a couple of months ago the stock was trading as low as $10.32, but over the last six weeks there has been a considerable move to the upside (about 29%).

The company announced earlier this quarter that a special dividend payout before the New Year of $1.00 a share will be distributed, equating to a total payout for Kforce of $36 million. This has been a common practice by many companies due to the previous uncertainty surrounding the fiscal cliff, and becoming more focused on the dividend tax that will be applied in 2013. It can be viewed as a negative as some would argue that dividend is being pushed up so that investors stay in the stock, and do not flee due to other reasons. On the flip side a special dividend distribution may also be viewed as a company rewarding its shareholders, and allowing them to avoid a potential dividend tax hike. In the case of Kforce it appears that the former applies.

There has been an extreme amount of insider selling in the stock as of late, which causes concern about the company's near-term performance. Ralph Struzziero filed to sell 4,000 shares in December. Howard Sutter (Officer & Director) sold 40,000 shares in December. Richard Cocchiaro filed to sell 364,399 shares in December. Despite the considerably strong insider selling, the stock has appreciated during the month of December, a few dollars shy of its five-year high of $17.55 on February 7, 2011.

Despite the environment for professional staffing viewed to be positive by the company, its last earnings report was not stellar. Revenues from continuing operations for the quarter ended September 30, 2012 were $270.2 million compared to $274.1 million for the quarter ended June 30, 2012, a decrease of 1.4%. With outlook growing more uncertain due to many macroeconomic headwinds, the company is expected to suffer at least for the first half of 2013. After such a tremendous run to the upside, a grim outlook (as stated by the CE), and strong insider selling, investors should look to sell short KFRC over the next few months.

Heading into the fourth quarter 2012, the most shorted stocks were First Solar (NASDAQ: FSLR), JC Penny (NYSE: JCP) and GameStop (NYSE: GME).  Their short interest vs. the public float was 47%, 40% and 36% respectively.  

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,810.06 +91.06 0.51%
S&P 500 2,063.50 +10.75 0.52%
NASDAQ 4,712.97 +11.1030 0.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs