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4 Staffing Stocks to Watch in a Resilient Labor Market

Ritujay Ghosh
Updated ·4 min read

The Fed has so far struggled to bring inflation down despite aggressively hiking rates over the past year. Given this situation, the central bank is expected to continue hiking interest rates for an extended period this year also. The Fed hinted at such a move earlier this year, which has now raised concerns about the economy slipping into a recession.

Despite sky-high inflation and consumers’ cautious spending on essentials, the labor market has been resilient. After a solid 2022, job additions to the economy have been robust this year too. This has been helping staffing firms. Stocks like Kforce Inc. KFRC, ManpowerGroup Inc. MAN, HireQuest, Inc. HQI and Heidrick & Struggles International, Inc. HSII are likely to benefit in the near term.

Labor Market Resilient

Nonfarm payrolls jumped once again in March after witnessing solid job additions in January and February. The Labor Department reported that nonfarm payrolls climbed an impressive 236,000, in line with the consensus estimate. Although this is lower than the record 504,000 and 311,000 job additions in January and February, respectively, the figures are quite impressive.

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With inflation showing slight signs of slowing, March proved to be yet another great month for the labor market.

Inflation had slowed at the end of 2022 but climbed back in January. However, it slowed once again in February. CPI data showed that inflation dipped to 6% in February compared to 6.4% in January. Month over month, CPI increased 0.4% in February after rising 0.5% in January.

Job additions were seen across various industries. The leisure and hospitality industry saw 72,000 job additions. Government jobs grew by 47,000, while health care, and professional and commercial services saw 34,000 and 39,000 new jobs in March.

Also, the unemployment rate continued to decline, dropping to 3.5% in March.

The solid jobs growth comes despite several tech companies announcing significant layoffs. The Labor Department also said that job openings fell below 10 million in February for the first time in two years. However, there are still plenty of job openings.

Stocks to Watch

The current situation makes for an ideal opportunity to invest in staffing stocks.

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 11.5%. The Zacks Consensus Estimate for current-year earnings has improved 6.6% over the past 60 days. KFRC has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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 its 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%. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the past 60 days. MAN carries a Zacks Rank #3.

HireQuest, Inc. provides temporary staffing services, which 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 40.2%. Shares of HQI have gained 14.4% in the past three months. HireQuest presently carries a Zacks Rank #3.

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 9.7%. The Zacks Consensus Estimate for current-year earnings has improved 9.2% over the past 60 days. HSII International presently carries a Zacks Rank #3.

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ManpowerGroup Inc. (MAN) : Free Stock Analysis Report

Kforce, Inc. (KFRC) : Free Stock Analysis Report

Heidrick & Struggles International, Inc. (HSII) : Free Stock Analysis Report

HireQuest, Inc. (HQI) : Free Stock Analysis Report

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