5 Staffing Companies With Upside

NEW YORK ( TheStreet) -- The U.S. staffing industry is estimated to grow at 12% in 2011 and 9% in 2012, according to a Staffing Industry estimate.

Industry analysts also forecast that 30% of businesses are likely to hire extra seasonal help this year and some employers plan to keep some of their seasonal workers as permanent staff after the holiday period.

According to a national survey conducted by jobs website Dice Holdings, recruiters and hiring managers foresee a solid hiring scenario during the first six months of 2012, with 47% planning additional hiring during the period, vs. the same period prior year. Also, 21% of respondents plan to adjust their hiring plans upwards, despite the uncertain economic situation.

Ford Motor ( F) is seeking to hire 7,000 in the U.S. by the end of 2012, while General Electric ( GE) has announced plans to add 400 software engineers over the next two years. Toronto-Dominion Bank intends to expand its corporate operations and create more than 1,400 new jobs in South Carolina over the next three to five years.

These five stocks have potential upsides ranging from 30% to 67% and buy recommendation of 69% and hold rating of 29%, based on a Bloomberg consensus.

The stocks are listed in ascending order of upside potential.

5. Robert Half International ( RHI) engages in providing specialized staffing and risk consulting services.

Of the 16 analysts covering the stock, 69% recommend a buy and 25% rate it a hold. There are no sell ratings on the stock. Its average 12-month price target is $32.45, up 30.4% from the current price, as per a Bloomberg consensus.

For the third quarter, the company recorded net income of $44.2 million, or 31 cents per share, compared to $20.6 million, or 14 cents per share, in the year-ago quarter. Revenue for the quarter increased to $984.7 million from $817.3 million in the same quarter prior year. The company's chief executive added that RHI has witnessed continuous expansion of gross margins across the temporary staffing divisions.

Early November, the company's board of directors approved quarterly cash dividend of 14 cents per share payable Dec. 15to all shareholders of record Nov. 23. For the fourth quarter, the company estimates revenues to be in the $950 million to $1,000 million range and earnings per share between 28 cents and 33 cents.

4. On Assignment ( ASGN), a diversified professional staffing firm, provides flexible and permanent staffing solutions in specialty skills, including laboratory/scientific, health care/nursing/physician, medical financial, information technology (IT) and engineering.

Of the five analysts covering the stock, four recommend buying and one rates a hold. There are no sell ratings on the stock. Its average 12-month price target is $13.67, which is 35.9% higher than the current price, as per a Bloomberg consensus.

For 2011 third quarter, the company recorded revenue of $162.4 million, up 40% from the year-ago quarter and 13% sequentially. Net income for the quarter more than doubled to $7.8 million, or 21 cents per diluted share, from $3.2 million, or 9 cents per share, in the third quarter of 2010.

For the third quarter, the average headcount of contract professionals increased to 4,765 from 4,421 in the second quarter of 2011, while staffing consultants for the same period increased to 816 from 776. Meanwhile, third-quarter gross profit per staffing consultant increased to $67,000 from $63,000 in the prior quarter.

For the fourth quarter, the company estimates revenue in the range of $157 to $159 million with a gross margin of almost 33.2%. The estimates are based on a year-over-year revenue growth in the low 30% range for IT and engineering and for life sciences, the low 20% range for health care and the high 30% range for physician staffing. Net income is estimated in the range of $5.8 to $6.3 million, while earnings per diluted share are seen between 15 and 16 cents.

3. Kforce ( KFRC), a professional and technical specialty staffing services and solutions provider, operates through four segments: Technology (Tech), Finance and Accounting (FA), Health and Life Sciences (HLS) and Government Solutions (GS). It provides both flexible and permanent staffing solutions.

Of the nine analysts covering the stock, seven recommend buying and the rest suggest a hold. There are no sell ratings on the stock. The stock's average 12-month price target is $16.00, or 47.2% above the current price, as per a Bloomberg consensus.

For 2011 third quarter, the company recorded revenue of $289 million, compared to $259.5 million for the third quarter of 2010 and $274 million for the second quarter of 2011. Net income for the quarter increased to $8.4 million, or 22 cents per share, from $6.4 million, or 16 cents per share in the third quarter of 2010, and $6.8 million, or 17 cents per share, in the second quarter of 2011.

Flex revenue per billing day of $4.3 million in the third quarter of 2011, represents 11.3% rise over the same quarter last year. Search revenue of $11.9 million indicates 12.4% increase from the third quarter of last year.

For the fourth quarter, the company estimates revenue to be in the range of $278 to $285 million, while earnings per share are expected between 17 cents to 20 cents. In October, the company's board of directors increased the existing authorization for repurchases of Kforce common stock by $75 million.

2. ManpowerGroup ( MAN), a workforce solutions and services provider, operates in five segments: Americas, France, EMEA, Asia-Pacific and Risk Management. It also provides recruitment and assessment, training and development, career management, outsourcing and workforce consulting.

Of the 17 analysts covering the stock, 71% recommend buying and the rest rate a hold. There are no sell ratings on the stock. Its average 12-month price target is $56.20, about 63.9% higher than the current price, a Bloomberg consensus shows.

For 2011 third quarter, the company reported revenues of $5.8 billion, an increase of 16% from the year-ago quarter. Net earnings increased to $79.6 million, or 97 cents, from $51.3 million, or 62 cents, in the third quarter of 2010.

Recently, at the WEF's "Special Meeting on Economic Growth and Job Creation in the Arab World," Manpower advocated the need for unlocking potential of women and youth in the region where only one of five women of working age is employed and one of four persons in the age group 15 to 24 years is unemployed.

For the fourth quarter, the company expects diluted earnings per share to be in the range of 85 to 95 cents, which includes estimated favorable currency impact of 3 cents.

Early November, the company's board of directors declared a dividend of 40 cents per share payable Dec. 15 to shareholders of record Dec. 5. Mid-2011, the company had raised its dividend by 8%. Besides, Manpower also announced its approved new share repurchase program, giving the company the ability to repurchase up to 3 million shares of its issued and outstanding common stock.

1. Kelly Services ( KELYA), a workforce solutions company with specialty businesses, assigns professional and technical employees in the fields of creative services, education, legal and health care. It provides services to a diversified group of customers through offices in three regions: the Americas, Europe, the Middle East, and Africa (EMEA) and Asia-Pacific (APAC).

Of the six analysts covering the stock, three recommend buying and the rest suggest a hold. There are no sell ratings on the stock. The stock's average 12-month price target is $22.00, which is 67.2% higher than the current price, a Bloomberg consensus show.

For 2011 third quarter, the company recorded revenue of $1.4 billion, a 10% increase from the same period last year. Net earnings for the quarter doubled to $19.7 million, or 52 cents per diluted share, from $9.6 million, or 26 cents per diluted share, in the year-ago quarter. Earnings from operations increased 54.7% to $22.1 million in the third quarter of 2010.

Recently, Kelly Services acquired Tradição Tecnologia e Serviços Ltda, a top national service provider in Brazil, to strengthen its presence in the Brazilian market. The acquisition includes 12 branch locations in Brazil.

Mid-November, the company's board of directors declared a dividend of 5 cents per share on its Class A and Class B common stock payable Dec. 2 to shareholders of record Nov. 17. For the fourth quarter, the company estimates continued revenue growth in the mid-single digits year-over-year basis.

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