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5 Top Stocks to Gain From Blowout Jobs Report

Tirthankar Chakraborty

Jobs growth picked up in March and smashed estimates, with nonfarm payrolls increasing for the 102th straight month. Hiring increased in almost all major segments of the economy, with the unemployment rate remaining at record low levels and wages improving at a steady pace.

Such a hiring spree eased lingering worries about the economy. Let us, thus, take a look at stocks that can make the most of a stellar jobs report.

U.S. Hiring Bounces Back

According to the Bureau of Labor Statistics, the economy added 196,000 new jobs in March, exceeding analysts’ estimates of around 179,000. The job additions in February were also revised up to 33,000 from 20,000. January’s job gains, in the meanwhile, remained a little changed at 312,000.

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Nonetheless, hiring speeds up by an average of 180,000 in the first three months of this year, marking a solid start indeed! After all, such a feat was achieved despite questions about employers’ ability to find skilled labor. Steve Rick, chief economist at CUNA Mutual Group, said “with a strong March employment report now in the books, we’ve gotten some reassurance that the labor market is still strong.”

Meanwhile, the jobless rate remained at 3.8% last month, slightly above a 49-year low. The real unemployment rate, including those who are underemployed and discouraged, also known as the U6 rate, is down from 7.9% a year ago. At the same time, another broader gauge of unemployment that especially includes discouraged workers or those who are into part time jobs for economic reasons was unchanged at 7.3%.

 

Staffing Stocks Shine

Such a strong month of hiring surely bodes well for staffing companies. Additionally, the Conference Board’s Employment Trends Index increased to 111.15 in February, up from downwardly revised 109.34 in January. Compared to the year-ago level, the index shows a jump of 4.3%.

Gad Levanon, Chief Economist, North America, at The Conference Board had said that “the Employment Trends Index bounced back in February and we expect employment to grow fast enough for the labor market to tighten further in 2019, making it easier for job seekers to find a job.”

A Slew of Job Hunters, Health-Care Providers Led the Way

By and large, the jobs report showed that most of the industries added jobs and workers’ pay continued to remain consistent over the past few months. Health care providers boosted payrolls by 49,000 and have increased staff by nearly 400,000 in the past year. Professional and technical firms took on 34,000 workers and leisure and hospitality sector beefed up payrolls by 33,000. Restaurants too increased staffing by 27,000.

Construction companies, in the meantime, boosted payrolls by 16,000. This is a significant improvement, since the prior month builders’ trimmed employment by the most in a year and a half due to the harsh winter season. But, there were some pockets of weakness. While manufacturers eliminated 6,000 jobs, retailers trimmed 12,000 jobs. Nevertheless, such a broader hiring spree indicated that those who are into the heath care, hotels and food businesses, and construction activities are in an expansion mode and their businesses are churning out enough profits.

 

(Source: Bureau of Labor Statistics)

5 Top Gainers

From recruiters and heath care to leisure and hospitality and construction companies, all stand to gain from a strong jobs report. Thus, investing in such stocks seems the right thing to do now. We have picked five such stocks that should make meaningful additions to your portfolio. These stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Heidrick & Struggles International, Inc. HSII provides executive search and consulting services to businesses and business leaders. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 6.6% over the past 60 days. The company’s expected earnings growth rate for the next quarter is 11.9%, in contrast to the Staffing Firms industry’s projected decline of 15.2%. The company has outperformed the broader industry so far this year (+33.8% vs +22.6%).

 

ABIOMED, Inc. ABMD engages in the research, development, and sale of medical devices to assist or replace the pumping function of the failing heart. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 3.7% over the past 60 days. The company’s expected earnings growth rate for the current year is 106.1%, higher than the Medical - Instruments industry’s rise of 17.7%. The company has outperformed the broader industry in the past two-year period (+127.7% vs +37.4%).

 

SeaWorld Entertainment, Inc. SEAS operates as a theme park and entertainment company in the United States. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 11.7% over the past 60 days. The company’s expected earnings growth rate for the current year is 138.5%, more than the Leisure and Recreation Services industry’s increase of 14.4%. The company has outperformed the broader industry over the past year (+59.6% vs -2.1%). You can see the complete list of today’s Zacks #1 Rank stocks here.

 

Darden Restaurants, Inc. DRI owns and operates full-service restaurants in the United States and Canada. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 1.6% over the past 60 days. The company’s expected earnings growth rate for the current year is 20.2%, higher than the Retail - Restaurants industry’s growth of 5.8%. The company has outperformed the broader industry on a year-to-date basis (+19.1% vs +13.7%).

 

AAON, Inc. AAON engages in engineering, manufacturing, marketing, and selling air conditioning and heating equipment. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 2.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 61.7%, more than the Building Products - Air Conditioner and Heating industry’s rise of 26.8%. The company has outperformed the broader industry so far this year (+31.2% vs +18.2%).

 

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