Kelly Services Thriving From the Current Need for Temps

The last few years have been good for providers of temporary and contract workers. 

Many companies have been growing and needed help, but given the uncertain nature of the global economy, they have been reluctant to add many full-time workers. 

It's then no surprise that Kelly Services (KELYA) , one of the world's leading temporary staffing firms , has thrived. The Troy, Mich.-based company's stock price has risen more than 26% over the past year. Kelly has achieved strong growth in Asia and Europe. Parts of the latter market have traditionally relied more heavily on temp workers than the U.S. 

Kelly also stands to benefit from a U.S. Labor Department update on regulations for white collar workers' overtime pay. Workers earning less than $47,476 are now eligible for time-and-a-half wages for every hour worked past 40 hours. That could make 4.2 million more salaried workers eligible for overtime pay. That's good for them, but it also represents an added cost for businesses.

At a time like this, it's best to go for guaranteed returns.

Kelly was already doing well even before this latest development. In its most recent recent quarter, the company reported earnings from operations of $14.7 million in the first quarter of 2016, up 22% year-over-year. Earnings were way up-29 cents per share of $0.29 versus 10 cents a year earlier.

Kelly Services is a well-established name outside of the United States. CEO Carl Camden said during a recent conference call that revenues and profits were growing even faster in Europe and Asia than in the U.S.

In recent years, the company has made significant inroads into India and Singapore. Many temp jobs -- call centers, IT support -- are now located in these countries.

Kelly's share price has been rising so far this year but its price-earnings ratio is still only around 12. Its dividend yield is a steady if unspectacular 1.57%.

All in all, this should continue to be a reliable long-term stock.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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