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US Jobs Market Show Signs of Healing: Here's How to Play It

Tirthankar Chakraborty
·5 min read

The U.S. labor market faced a slew of hindrances in October that could have easily slowed down expansion. A relentless rise in coronavirus cases could have resulted in states closing down businesses yet again and consumers cutting their outlays.

However, activity in both the manufacturing and service side of the economy picked up last month, with consumers stepping up purchases. This, no doubt, showed steady economic recovery and got reflected in the labor market data. According to the U.S. Bureau of Labor Statistics, the U.S. economy added 638,000 jobs last month, its sixth consecutive monthly gain.

The labor market, in fact, has now recovered a considerable number of jobs lost in the months of March and April, when the initial outbreak of the coronavirus pandemic forced businesses to shutdown, propelling the jobless rate to a record high. But then again, the unemployment rate dropped sharply last month, another sign that the economy is improving, albeit at a slower pace.

The U.S. Bureau of Labor Statistics added that the unemployment rate declined a percentage point to 6.9% in October, with jobless rate falling among all major group of workers, including Whites, Blacks, Asians and Hispanics. Notably, the broader U-6 unemployment rate was also down to 12.1% in October from 12.8% in the prior month. And it’s unquestionably following a downward trend for quite sometime. Have a look–

Coming back to the improvement in overall payrolls, it’s worth pointing out that job additions improved despite significant loss in government jobs. A 268,000 drop in government jobs was largely offset by 906,000 job additions in the private sector last month.

Also, industries that mostly added jobs last month were leisure and hospitality, retail and construction. Restaurants, bars and other eateries that are part of the leisure and hospitality industry added 192,000 jobs, while retail and construction industries added 104,000 and 84,000 jobs, respectively. Manufacturing too added a healthy 38,000 new jobs.

Despite anxiety over COVID-19, consumer sentiment as well as spending did hold up in October, bolstering sales at restaurants and retail outlets. U.S. construction spending has already increased for the fourth straight month in September, while the U.S. manufacturing gauge expanded at the fastest pace last month since 2018.

Therefore, investing in sound stocks from these industries won’t be a bad proposition. After all, job additions indicate that the industries are in the pink of health. Also, job additions bode well for staffing players. The requirement for staffing services should increase as the labor force participation rate improved by 0.3 percentage point to 61.7% last month, per the U.S. Bureau of Labor Statistics. Hence, investing in staffing stocks for the time being seems prudent as well.

5 Solid Choices

We have, thus, selected five stocks from the aforesaid areas that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Brinker International, Inc. EAT owns, operates, develops and franchises various restaurants under Chili’s Grill & Bar (Chili’s) and Maggiano’s Little Italy (Maggiano’s) brands. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up almost 34% over the past 60 days. The company’s expected earnings growth rate for the current and next year is 59.1% and 36.4%, respectively.

Deckers Outdoor Corporation DECK is a leading designer, producer, and brand manager of innovative, niche footwear and accessories. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has risen 21.9% over the past 60 days. The company’s expected earnings growth rate for the current and next year is 14.6% and 17.8%, respectively.

Beazer Homes USA, Inc. BZH designs, builds and sells single family homes. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved 8.5% north over the past 60 days. The company’s expected earnings growth rate for the current and next year is 20.5% and 4.6%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lakeland Industries, Inc. LAKE manufactures and sells industrial protective clothing and accessories. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has advanced 41.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 631.1%.

ManpowerGroup Inc. MAN is one of the leading providers of innovative workforce solutions and services across the globe. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved 22.3% up over the past 60 days. The company’s expected earnings growth rate for the next year is 66.4%.

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ManpowerGroup Inc. (MAN) : Free Stock Analysis Report
 
Brinker International, Inc. (EAT) : Free Stock Analysis Report
 
Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report
 
Beazer Homes USA, Inc. (BZH) : Free Stock Analysis Report
 
Lakeland Industries, Inc. (LAKE) : Free Stock Analysis Report
 
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