This Day On The Street
Continue to site
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

Obamacare Is Healthy for Temporary-Staffing Companies

NEW YORK (TheStreet) -- Many investors feel confused about conflicting economic indicators. But as they look for investment opportunities, they should note that companies in the staffing and outsourcing sector such as Paychex (PAYX - Get Report), TrueBlue (TBI), Robert Half International (RHI) and ManPowerGroup (MAN - Get Report) will likely continue to prosper regardless of the conditions.

The most recent gross domestic product numbers were strong. But writing in today's Wall Street Journal, Robert E. Grady, chairman of the New Jersey State Investment Council, said, "Public companies have trillions of dollars of cash to invest sitting on their balance sheets, but the Obama economy's growth record is weak, and insufficient to attract investment capital."

Growth may be weak, but the $100 billion staffing sector's firms are appealing no matter what the investor outlook. These firms range from prominent blue-chips such Paychex to prominent small-caps such as Labor SMART (LTNC).

Bearish investors should be encouraged that in times of economic uncertainty, businesses shy away from hiring full-time employees. Instead, temporary workers are hired to fill in the gaps to save money. That increases the market demand for staffing firms, especially for those in the $29 billion demand-labor segment such as TrueBlue and Labor SMART.

For the bulls out there, companies coming out of the Great Recession will need more workers. During the Great Recession, many firms adapted their business model to use project workers instead of full-time employees. Corporations realized the value of utilizing contractors, who provide much greater efficiency and much lower costs. Temporary-worker hiring continued during the recovery and will remain important in the future.

Must Read: Interesting August 2014 Stock Options For HPQ

That is clearly shown by the growth rates in recent times.

For TrueBlue, the quarterly sales growth rate is 18.9%. Earnings per share are rising at 30.6% for the same period. Labor SMART has reported record revenues for recent quarters, with a very bullish analyst report. With its lucrative niche in legal and accounting services, Robert Half International has an earnings-per-share quarterly growth rate of 17.10%.

In addition, the Affordable Care Act, or Obamacare, has incontrovertibly resulted in more business for the staffing sector. As the health care mandate rolls out, staffing companies will continue to prosper.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

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

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
MAN $90.34 0.00%
PAYX $46.71 0.00%
AAPL $122.99 0.00%
FB $94.85 -2.20%
GOOG $631.93 0.00%

Markets

Chart of I:DJI
DOW 17,751.39 +121.12 0.69%
S&P 500 2,108.57 +15.32 0.73%
NASDAQ 5,111.7330 +22.5270 0.44%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs