4 Staffing Stocks to Watch on Solid February Job Additions

·4 min read

The Fed had been aggressive at hiking interest rates through 2022, but the fight to bring down inflation is still far from won. Interest rate hikes will thus continue for an extended period this year too. The Fed already hinted at such a move earlier this month, which has now raised serious concerns about the nation’s economic health. Many fear that the economy might soon collapse into a recession.

However, despite inflation at multi-decade highs and consumers spending cautiously, the labor market has remained resilient. After a solid 2022, job additions have been robust this year too. Staffing firms have been the biggest beneficiary of the situation. Thus, stocks like HireQuest, Inc. HQI, Kforce Inc. KFRC, Heidrick & Struggles International, Inc. HSII and ManpowerGroup Inc. MAN are likely to benefit in the near term.

Labor Market Remains Strong

Nonfarm payrolls jumped once more in February after solid job additions in January. The Labor Department reported that nonfarm payrolls jumped a solid 311,000 in February, which surpassed economists' expectations of a rise of 205,000. This comes after a record 504,000, jobs were added in January.

As inflation continued to show indications of moderating, February proved to be a great month for the labor market.

Inflation showed signs of slowing in December but picked up once again in January. However, fresh data released on Mar 14 showed that inflation eased in February. CPI data for February showed that inflation fell to 6% in February compared to 6.4% in January. On a month-over-month basis, CPI increased 0.4% in February after increasing 0.5% in January.

The solid growth was driven by job additions across a large variety of industries. The leisure and hospitality industry added the maximum number of jobs, totaling 105,000. The retail sector added 50,000 new jobs, while the government sector added 46,000 jobs. Professional and business services saw a jump of 45,000.

The impressive job additions come despite several tech companies going for massive layoffs. This means job openings are still high. According to the Labor Department, employers posted 10.8 million job openings in January, down from 11 million in December. However, the figures are still quite high.

In January, more Americans also started looking for work. The percentage of persons employed or actively seeking employment rose to 62.5% in January.

Given that the Labor Department's figure for layoffs has been less than 1.5 million for 21 straight months, it is understandable that there are still millions of open positions.

Stocks to Watch

Given this situation, it makes for an ideal opportunity to invest in staffing stocks.

HireQuest, Inc. provides temporary staffing services that include general labor, industrial and construction personnel. HQI serves primarily in the areas of construction, light industrial, manufacturing, hospitality and event services.

HireQuest’s expected earnings growth rate for the current year is 33.3%. Shares of HQI have gained 64.1% in the past six months. HireQuest presently carries a Zacks Rank #2 (Buy).

Kforce Inc. and its subsidiaries provide professional staffing services and solutions to clients on both a temporary and permanent basis through its Technology and Finance, and Accounting segments. KFRC’s Tech Segment provides both Flex and Direct Hire services to clients, focusing primarily on areas of information technology such as systems/applications architecture and development, data management, business and artificial intelligence, machine learning and network architecture and security.

Kforce’s expected earnings growth rate for next year is 11.52%. The Zacks Consensus Estimate for current-year earnings has improved 7.6% over the past 60 days. KFRC has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Heidrick & Struggles International, Inc. serves the executive talent and leadership needs of the world's top organizations as the premier provider of leadership consulting, culture shaping and senior-level executive search services. With years of experience in fulfilling their clients' leadership needs, HSII offers and conducts executive search services in every major business center in the world.

Heidrick & Struggles International’s expected earnings growth rate for next year is 1.5%. Shares of HSII have gained 14% in the past six months. Heidrick & Struggles International presently sports a Zacks Rank #1.

ManpowerGroup Inc. is one of the leading providers of innovative workforce solutions and services across the globe. MAN has a well-established network of 2,500 offices in 75 countries and territories. ManpowerGroup provides a wide range of staffing solutions as well as engagement and consulting services through its major brands — Manpower, ManpowerGroup Solutions and Experis.

ManpowerGroup’s expected earnings growth rate for next year is 17.9%. Shares of MAN have gained 12.6% in the past six months. ManpowerGroup carries a Zacks Rank #3 (Hold).

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