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We can all agree that the jobs report was pretty lousy. On a year-over-year basis, the growth in employment is barely staying positive.

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However, as Jim Cramer likes to point out, there's always a bull market somewhere, and regular readers probably know I like to use the economic reports as a source of stock ideas. Until they launch an "Economy ETF" (believe me, it won't be long before somebody tries), that means sifting through the reports to find the industries and companies that are most poised to benefit from the prevailing trends.

In this morning's jobs report, that was pretty easy. According to the Bureau of Labor Statistics report, only five industries are showing statistically significant job growth:

  • Hospitals
  • Ambulatory health care services
  • Nursing and residential care facilities
  • Oil and gas extraction
  • Pipeline transportation

I'll bet you noticed the same pattern in those industries that I did. What's more, this is not a one-month fluke. Both hospitals and oil and gas extraction were among the statistically significant gainers the last time I looked at employment trends. I believe a trend that is this persistent, and counter to the overall trend in the economy, should not be ignored.

Some of these ideas I've talked about before. For example, the oil exploration firm W&T Offshore ( WTI - Get Report) is up 19.5% since I last wrote about it, barely a month ago.

Stone Energy ( SGY) also has potential. Over the last four quarters, it has beaten consensus estimates by an average of 43%, and the 2008 earnings estimate has risen from $5.20 to $8.22 in the last 90 days, though the high accrual ratio suggests those earnings may be low quality. As with most companies in the industry, price momentum is also strong. What's more, even after adjusting for a likely one-time reduction in accounts receivable I estimate its free cash flow over the last 12 months to be about $165 million, good for a free cash flow yield of 8.25%.

In health care, there are several interesting names to consider. Take Res-Care ( RSCR), for example. It has beaten estimates in each of the last four quarters, and the estimates for full-year 2008 and 2009 have been very stable. Its free cash flow over the last year (excluding cash paid for acquisitions) was $61 million, good for a free cash flow yield of 10.8% on its $557 million market capitalization. The acquisitions have contributed to a five-year historic annual growth rate of 23%, and analysts expect the growth to be close to 11% annually over the next three to five years. Meanwhile, the stock has gone nowhere over the last year.

How about Kindred Healthcare ( KND), whose 2008 earnings estimates have risen more than 10% over the last 90 days? Or Universal Health Services ( UHS - Get Report), which has seen its 2008 earnings estimates rise to $3.78 from $3.40 and its 2009 estimates rise to $4.16 from $3.80 in the last three months, yet whose stock is basically unchanged from this time last year.

What about Amerigroup ( AGP)? Although its estimates have been taken down, it has a 14% return on equity yet is trading at just 1.5 times book value and 11.5 times this year's consensus earnings estimate. It looks to me that it has sustainable free cash flow in the $110 million range, which amounts to a 7.3% free cash flow yield on the current market capitalization.

Obviously, this is only a first pass at the names. Investors would need to do some additional homework to determine whether a particular stock is right for their portfolio. But in this market, homework will be especially rewarding.

At the time of publication, Trent had no positions in the stocks mentioned, 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.