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4 Stocks to Buy From Sectors With Maximum Job Gains

Zacks Equity Research

Job growth across the United States was rather impressive in October, as both analysts and investors least expected a robust addition of new positions. After all, the world’s largest economy expanded in the third quarter at the slowest pace in 2019. Also, a near six-week-long strike at General Motors Company GM knocked out a considerable number of striking employees from being counted as employed.

But new job additions last month surprised Wall Street anyway, reflecting a strong domestic economy. Given the strength in the U.S. job market, one should consider investing in sectors that added a significant number of new jobs. After all, job additions in these sectors are indicative of growth.

Private-Sector Job Additions Topped Expectations

According to the Labor department, total nonfarm payroll employment in October increased by 128,000. Job additions took place broadly across sectors, with food services and drinking places creating maximum new jobs.

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The new job additions of 128,000 were astounding, given the General Motors strike that took a toll on the motor vehicles and parts segment of the U.S. manufacturing sector. This is because employees on strike are treated as unemployed in the U.S. statistics.

In fact, the unemployment rate edged up to 3.6% last month, but still remained the lowest since 1969.

These Sectors Added Most New Roles

Diving deeper into sectoral job additions, food services and drinking places created 48,000 positions, driving maximum employment. Professional and business services was the second-leading sector, having added 22,000 new roles.

Employment in social assistance rose by 20,000 while new job additions in financial activities increased by 16,000. The healthcare sector also added 15,000 new jobs in October.

The General Motor strike was reflected in manufacturing employment, which lost 36,000 roles last month. In fact, employment in motor vehicles and parts declined by 42,000. New job additions across sectors such as construction, mining, wholesale trade, retail trade, transportation and warehousing and information changed little in October.

4 Picks From Winning Sectors

We have, therefore, selected four stocks from sectors with the most job gains. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Financial Services

Navient Corporation NAVI is a provider of education loan management and business processing solutions. The company carries a Zacks Rank #1.

The Zacks Consensus Estimate for Navient’s current-year earnings has risen 2.9% over the past 60 days.The company’s stock has outperformed the Zacks Financial-Consumer Loans industry on a year-to-date basis (+57.5% vs +31.5%). You can see the complete list of today’s Zacks #1 Rank stocks here.

Healthcare

BeiGene, Ltd. BGNE is a developer and marketer of molecularly-targeted and immuno-oncology drugs, which are used for treating cancer. The company sports a Zacks Rank #1.

The Zacks Consensus Estimate for BeiGene’s current-year earnings has risen 2.2% over the past 60 days.The company’s stock has outperformed the Zacks Medical – Biomedical and Genetics industry on a year-to-date basis (+35.2% vs +1.3%).

Business Services

SPS Commerce, Inc. SPSC is a provider of cloud-based supply chain management solutions. The company carries a Zacks Rank #1.

The Zacks Consensus Estimate for SPS Commerce’s current-year earnings has risen 5.2% over the past 60 days.The company’s stock has outperformed the Zacks Business – Services industry on a year-to-date basis (+29.6% vs +7.7%).

Restaurants

Chipotle Mexican Grill, Inc. CMG is the owner and operator of Chipotle Mexican Grill restaurants. The company carries a Zacks Rank #2.

The Zacks Consensus Estimate for Chipotle Mexican Grill’s current-year earnings has risen 2.8% over the past 60 days.The company’s stock has outperformed the Zacks Retail – Restaurants industry on a year-to-date basis (+78.0% vs +16.9%).

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SPS Commerce, Inc. (SPSC) : Free Stock Analysis Report
 
General Motors Company (GM) : Free Stock Analysis Report
 
Navient Corporation (NAVI) : Free Stock Analysis Report
 
BeiGene, Ltd. (BGNE) : Free Stock Analysis Report
 
Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
 
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Zacks Investment Research