"We see the stock as significantly undervalued," says Michael W. Jaffe, analyst at S&P, who argues that it merits a higher valuation because Kelly's primary nonprofessional client market tends to lead labor marker recoveries. He believes the labor markets are in the early stages of revival, and with the number of nonskilled temp workers -- Kelly's primary market -- increasing in the U.S. during 14 of the 15 months through December of 2010, Jaffe sees demand for Kelly's services rising further.

Adding "Strength to the Story"

Kelly's focus on placing temp workers to fill nonprofessional positions "leaves it very well situated for the current market environment," says Jaffe. Kelly's revenues, very weak in the second half of 2008, started to show signs of recovery in the latter part of 2009. The pickup in demand reflects the early stages of a global economic recovery. "We think the improving trends will continue for an extended period," he adds.

Also bullish on Kelly is Tobey Sommer, analyst at SunTrust Robinson Humphrey, who notes that the higher temp employment rates and "incrementally better labor market data adds strength to the story." He rates the stock as overweight with a 12-month price target of $25 a share, based on forecasts that earnings will jump to $1.25 a share in 2011 from an estimated 69 cents in 2010. Sommer expects profits will jump further to $1.49 in 2012.

Manpower's stock has also been on the rise, climbing from $39 a share in June to close at $64 on Jan. 28, despite challenging operating conditions marked by a very depressed permanent-positions jobs market. "The global staffing giant has rebounded strongly after a dismal 2009, thanks to an improved economic landscape and increased demand for Manpower's services," notes Michael Ratty, analyst at investment research firm Value Line.

Similar to Kelly's improved business, Manpower is positioned to benefit from the economic rebound and "generate a greater percentage of its revenues from higher-margin sources during this labor market recovery," says Signal Hill Capital Group's Robillard.

Some Big Names Are Big Stakeholders

He expects the stock to continue its upward trend. Based on its historical average price-to sales multiple and his earnings forecasts, Robillard says the stock could jump to $83 a share in 12 months. Robillard expects Manpower's fully diluted earnings to leap in 2012 to $4.10 a share, way up from an estimated $2.70 in 2011 and from an estimated $1.67 in 2010.

Investors who are uncertain of jumping into such jobs-related stocks might find comfort in the fact that some of the large institutional investors have already done so. At Manpower, the big holders are led by BlackRock Institutional Trust, which holds 9.32% stake; Manning & Napier Advisors, with 7.22%; and T. Rowe Price Associates, with 6.23%. At Kelly, the top three shareholders are Franklin Advisory Services, which owns 7.40%; Dimensional Fund Advisors, with 7%; and, again, BlackRock, with 5.78%.

-- Gene Marcial writes for AOL's DailyFinance.

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