In this article, we will take a look at the 10 best staffing company stocks to buy.
Unemployment hit record highs in 2020 as the COVID-19 pandemic battered the world economy, forcing many businesses to remain shuttered and leading to layoffs and pay cuts across the board. Data from the United States Bureau of Labor Statistics shows that nearly all 50 states in the country were experiencing high levels of unemployment in March despite the vaccine rollout allowing for the partial reopening of the economy. As more business resumes, labor demands are finally starting to pick up some steam after a torrid twelve months.
The companies that operate in the workforce solutions and human resources segment have much to gain from this increased activity. Microsoft Corporation (NASDAQ: MSFT), which owns a popular employment-oriented online service called LinkedIn, recently reported record advertisement sales on the platform and even claims that engagement numbers have increased by 29% on the professional networking website. Microsoft Corporation (NASDAQ: MSFT) had purchased LinkedIn back in 2016 for more than $26 billion.
Another staffing giant that will benefit from the post pandemic economy is Paychex, Inc. (NASDAQ: PAYX). The Small Business Employment Watch, owned by IHS Markits in partnership with Paychex, Inc. (NASDAQ: PAYX), showed that the Small Business Jobs Index, which measures payroll data of approximately 350,000 Paychex clients to highlight employment trends in the American jobs market, stood at 98.34 in April, indicating a close to 4% upside compared to the same time in the previous year.
Economists have predicted job gains of close to one million in May after a slower-than-expected April, and Korn Ferry (NYSE: KFY), a staffing company based in Los Angeles, is uniquely placed to take advantage of the expected boom in the economy. Jacob Zabkowicz, the vice president of Korn Ferry (NYSE: KFY), has said that candidates the company deals with are receiving multiple offers, and often taking a different job after they’ve accepted one offer. He also highlighted other challenges and opportunities in the post-pandemic world for staffing firms. KFY is one of the best staffing company stocks to buy.
The role of technology in shaping modern day workplace solutions is also worth discussing. Workday, Inc. (NASDAQ: WDAY), a human capital management firm, offers clients the chance to use its machine learning platform to build a company and workforce around skills that are likely to help the business grow. Workday, Inc. (NASDAQ: WDAY) uses data analytics and intelligent automation to deliver these insights. It is one of the best staffing company stocks to buy in 2021.
Meanwhile, CBRE Group, Inc. (NYSE: CBRE), a firm that provides workplace solutions, has had to deal with a fall in demand for office spaces as remote working becomes more popular. However, the reopening of the economy will benefit CBRE Group, Inc. (NYSE: CBRE) as business activities resume full throttle in the coming months.
In the coming months, it is expected that the revenue for employment and recruiting agencies will grow in tandem with improvement in the labor market. However, the composition of demand for different industry services has shifted as a result of the COVID-19 pandemic. Even though the job market will recover from the coronavirus impact in the coming years, overall wages are expected to shrink slightly as a result of increased automation. This technology-led disruption is likely to affect not only blue collar workers but white collar ones in the finance world as well.
Like the staffing industry, the hedge fund industry is also feeling the impact of the coronavirus crisis. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Photo by Annie Spratt on Unsplash
With this context in mind, here is our list of the 10 best staffing company stocks to buy.
Best Staffing Company Stocks to Buy
10. HireQuest, Inc. (NASDAQ: HQI)
Number of Hedge Fund Holders: 1
HireQuest, Inc. (NASDAQ: HQI) is a South Carolina-based company that provides staffing solutions. It was founded in 2002 and is placed tenth on our list of 10 best staffing company stocks to buy. The firm provides businesses with skilled and semi-skilled labor, including industrial, clerical, administrative, and construction personnel. HireQuest stock has returned more than 206% to investors in the past year. The company has operations in 35 states across the United States and maintains more than 130 offices.
HireQuest, Inc. (NASDAQ: HQI) is a good option for income investors. On May 5, the company raised its quarterly dividend by 20% to $0.06 per share based on expectations for the post pandemic recovery of the economy. The forward yield was 1.28%.
At the end of the fourth quarter of 2020, 1 hedge fund in the database of Insider Monkey held stakes worth $172,000 in the firm, the same as in the preceding quarter worth $90,000.
In its Q2 2020 investor letter, Artko Capital, an asset management firm, highlighted a few stocks and HireQuest, Inc. (NASDAQ: HQI) was one of them. Here is what the fund said:
“HireQuest (HQI) – We continue to hold a significant Core Portfolio position in HireQuest, at above 13% of the portfolio, as the company’s stock held up admirably in 2020, down a little over 10% in the first half of the year. Our thesis remains unchanged and largely on track, with HireQuest, the larger acquiring entity through a reverse merger in 2019, acquiring approximately 20 owned branches from Command Center, the public company. Through sales and franchise agreements over the last year HireQuest converted the branches into franchises where at the end of March 2020 it managed 135 staffing franchises throughout the United States.
Of course, owning a staffing business in the middle of pandemic will have certain moving parts and having a number of branches closed and not generating franchise fees in the spring is unlikely to result in growth this year. However, the dynamic of having a working capital intensive franchisor business during the slowdown results in significant cash cycle release, where in the 1st quarter the $75mm market cap company generated $5.5mm in operating cash flow adding to its $4.5mm cash balance. We expect an additional $5-10mm in cash flow generation this year from both, ongoing operations of franchisee fees and notes receivable interest, and more working capital releases. Of course we’d rather see growth in the topline but given the recessionary environment building up a significant cash balance is likely to allow the company and its 44% owner and founder CEO Rick Hermanns to be strategically opportunistic. In fact, in June 2020 the company whose 68% of the shares are owned by insiders, and averages 6,600 daily average announced a 1mm share, or 7.5% of outstanding shares, buyback. The bigger number however is that this buyback represents close to 25% of the float, and we’ll be looking forward to seeing the execution of this buyback. In the meantime, the CEO and the board have made 116 insider purchases on the open market in 2020 giving us somewhat of an increased confidence level.
Its hard to predict where this company will end in 2020 with parts of the economy like hospitality essentially shut down, while other parts like homebuilding surging, however, we expect the company to continue to generate positive, ex working capital release, earnings and cash flows in 2020. Looking a few years out, with the transition to an all franchise model and a likely return of positive economic growth in late 2021/early 2022 we can see the company generating a growing $10mm+ a year in Earnings Before Interest & Taxes (EBIT) / Free Cash Flow (FCF) at 60%+ operating margins and returning this cash to shareholders via more buybacks and dividends with our intermediate term price target at above $10/share.”
9. Cross Country Healthcare, Inc. (NASDAQ: CCRN)
Number of Hedge Fund Holders: 15
Cross Country Healthcare, Inc. (NASDAQ: CCRN) is a Florida-based company that provides healthcare staffing and workforce solutions. It is ranked ninth on our list of 10 best staffing company stocks to buy and was founded 1986. Cross Country stock has returned more than 161% to investors over the past twelve months. The company offers solutions for nurse and allied staffing, physician staffing, as well as independent contractors, healthcare executives, and other healthcare professionals.
On May 5, Cross Country Healthcare, Inc. (NASDAQ: CCRN) posted earnings results for the first three months of 2021, reporting a revenue of $329 million, beating market estimates by close to $40 million and up 56% compared to the revenue over the same period in 2020.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Royce & Associates is a leading shareholder in Cross Country Healthcare, Inc. (NASDAQ: CCRN)with 1.7 million shares worth more than $15.7 million.
8. Heidrick & Struggles International, Inc. (NASDAQ: HSII)
Number of Hedge Fund Holders: 12
Heidrick & Struggles International, Inc. (NASDAQ: HSII) is an Illinois-based company that provides international executive talent to businesses. It is placed eighth on our list of 10 best staffing company stocks to buy and was founded in 1953. The company stock has returned more than 97% to investors in the past year. In addition to providing top executives, the firm also offers consultations in leadership and corporate culture. It has a network of more than 400 consultants through which it offers services to different industries.
Heidrick & Struggles International, Inc. (NASDAQ: HSII) released quarterly earning numbers on April 26, reporting a revenue of $194 million in the first quarter of 2021, up more than 11% year-on-year, and beating market estimates by more than $31 million. Like Workday, Inc. (NASDAQ: WDAY), CBRE Group, Inc. (NYSE: CBRE) and Microsoft Corporation (NASDAQ: MSFT), HSII is one of the best staffing stocks to buy now.
At the end of the fourth quarter of 2020, 12 hedge funds in the database of Insider Monkey held stakes worth $91 million in Heidrick & Struggles International, Inc. (NASDAQ: HSII), down from 14 in the preceding quarter worth $76 million.
7. TrueBlue, Inc. (NYSE: TBI)
Number of Hedge Fund Holders: 16
TrueBlue, Inc. (NYSE: TBI) is a Washington-based company that provides specialized workforce solutions. It was founded in 1985 and is ranked seventh on our list of 10 best staffing company stocks to buy. TrueBlue stock has returned more than 84% to investors over the past year. The firm provides workforce solutions to several industries, including construction, manufacturing, logistics, warehousing, waste and recycling, energy, retail, and hospitality, among others. It has more than 5,000 employees.
On April 27, TrueBlue, Inc. (NYSE: TBI) stock jumped more than 20% as the company posted encouraging quarterly results for the first three months of 2021, reporting a revenue of $458 million that beat market estimates by more than $7 million.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Pzena Investment Management is a leading shareholder in TrueBlue, Inc. (NYSE: TBI) with 1.6 million shares worth more than $30 million.
6. Kforce Inc. (NASDAQ: KFRC)
Number of Hedge Fund Holders: 16
Kforce Inc. (NASDAQ: KFRC) is a Florida-based professional staffing agency that primarily serves the technology and finance sectors. It is placed sixth on our list of 10 best staffing company stocks to buy. Some of the professionals it provides specialize in application development, data management, business and artificial intelligence, and machine learning. Kforce stock has returned more than 101% to investors in the past year. The firm has a market cap of more than $1.2 billion.
Kforce Inc. (NASDAQ: KFRC) posted quarterly results on May 3, reporting a revenue of $363 million that beat market estimates by close to $4 million and up more than 8% compared to the revenue for the first quarter of the previous year. Like Workday, Inc. (NASDAQ: WDAY), CBRE Group, Inc. (NYSE: CBRE) and Microsoft Corporation (NASDAQ: MSFT), KFRC is one of the best staffing stocks to buy now.
At the end of the fourth quarter of 2020, 16 hedge funds in the database of Insider Monkey held stakes worth $44 million in the firm, down from 19 in the previous quarter worth $48 million.
5. Paychex, Inc. (NASDAQ: PAYX)
Number of Hedge Fund Holders: 32
Paychex, Inc. (NASDAQ: PAYX) is a New York-based company that provides human resource, payroll, and other services to businesses. It is placed fifth on our list of 10 best staffing company stocks to buy and was founded in 1971. Paychex stock has returned more than 50% to investors over the past year. The firm has operations in Europe in addition to the United States. It mostly serves small or medium-sized entities. It has a market cap of more than $36 billion and posted more than $4 billion in annual revenue in 2020.
Paychex, Inc. (NASDAQ: PAYX) pays a regular dividend and is a top stock for income investors. On April 30, it declared a quarterly dividend of $0.66 per share, a 6.5% increase from the previous dividend of $0.62.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Select Equity Group is a leading shareholder in the firm with 6.5 million shares worth more than $607 million.
4. Korn Ferry (NYSE: KFY)
Number of Hedge Fund Holders: 17
Korn Ferry (NYSE: KFY) is a California-based management consulting firm founded in 1969. It is placed fourth on our list of 10 best staffing company stocks to buy. It has operations in more than 53 countries and employs more than 8,000 people. The firm provides executive level talent as well as mid-tier management solutions. It also has a leadership development program. Korn stock has returned more than 134% to investors over the past year. The firm primarily serves middle market and emerging growth companies.
Korn Ferry (NYSE: KFY) posted earnings for the third fiscal quarter on February 22, reporting a revenue of $477 million, beating market estimates by more than $54 million but down more than 9% compared to the same period last year.
At the end of the fourth quarter of 2020, 17 hedge funds in the database of Insider Monkey held stakes worth $196 million in the firm, down from 21 in the preceding quarter worth $156 million.
In its Q3 2020 investor letter, Third Avenue Management, an asset management firm, highlighted a few stocks and Korn Ferry (NYSE: KFY) was one of them. Here is what the fund said:
“Korn Ferry – Korn Ferry is a company that has historically been known for its market leading position in the executive search industry. This business entails highly sophisticated searches for senior roles at a wide variety of corporations and other organizations. Typical assignments might include the identification and recruitment of CEOs, CFOs or board members. This is a high margin and very lucrative practice for successful companies in this industry. However, Korn Ferry, mostly through a series of acquisitions over a number years, has expanded and diversified its lines of business to include other competencies, such as consulting roles to guide the planning of corporate workforces, the recruitment of large-scale, non C-suite workforces and a variety of educational and training consultations. Korn Ferry has also made strides building a digital business that is capable of monetizing Korn Ferry’s proprietary data, which is one of the world’s most substantial databases of employment and compensation information. The company is run by one of the industry’s most respected CEOs, who has been responsible for the company’s acquisition and diversification strategy and is also substantially aligned with shareholders via a large personal interest in the stock.
Korn Ferry’s issues today appear entirely exogenous to the company and are primarily a function of the COVID-related shutdown. Not surprisingly this has caused a reduction in new business generation for the company, which we believe to be temporary. We view the company to be quite cheap as measured by its valuation relative to any estimate of normalized profit. Furthermore, the combination of a very strong balance sheet and a highly flexible cost structure put the company in a position to endure long bouts of depressed operating conditions, if necessary. We do suspect though that there are several underappreciated factors that may drive a more rapid business recovery than some seem to expect. First, it would not be surprising to see an acceleration of C-suite and board member turnover as companies emerge from the pandemic and adjust previous plans. Similarly, the COVID experience has accelerated a number of pre-existing trends whereby a variety of large-employment industries may not be in a position to re-hire their former workforces for some time while other large-employment industries are finding themselves needing to expand workforces rapidly. Last but not least, Korn Ferry is one of the companies on the front lines of helping companies accomplish their diversity and inclusion goals. Korn Ferry’s employee education and training functions support corporate culture as it relates to diversity and inclusion and the company’s executive search functions are increasingly being called upon to help make boards and c-suites more diverse. It is our sense that this incremental source of demand is lasting and more substantial than may be appreciated today.”
3. Perficient, Inc. (NASDAQ: PRFT)
Number of Hedge Fund Holders:
Perficient, Inc. (NASDAQ: PRFT) is a Missouri-based global digital consultancy firm. It is ranked third on our list of 10 best staffing company stocks to buy and was founded in 1998. Perificient stock has returned more than 110% to investors in the past year. The company primarily operates in North America. Some of the professionals the company links with businesses operate in digital and technology strategy, management consulting, organizational change management, and intelligence solutions areas.
On April 29, Perficient, Inc. (NASDAQ: PRFT) posted earnings for the first three months of 2021, reporting a revenue of $169 million and earnings per share of $0.74. The quarterly revenue was up more than 16% compared to the same period in 2020 and beat market estimates by more than $2.6 million.
Out of the hedge funds being tracked by Insider Monkey, Atlanta-based investment firm Blue Grotto Capital is a leading shareholder in the firm with 415,477 shares worth more than $19 million.
2. Microsoft Corporation (NASDAQ: MSFT)
Number of Hedge Fund Holders: 258
Microsoft Corporation (NASDAQ: MSFT) is a Washington-based technology company that was founded in 1975. It is placed second on our list of 10 best staffing company stocks to buy. The firm owns LinkedIn, the premier social network that focuses on professional profiles and links individuals looking for jobs with businesses seeking to hire them. LinkedIn had 740 million registered members from 150 countries. Microsoft stock has returned more than 32% to investors in the past twelve months.
On May 13, investment advisory Rosenblatt initiated coverage on Microsoft Corporation (NASDAQ: MSFT) stock with a Buy rating and a price target of $301. Microsoft shares jumped more than 2% after the ratings update.
At the end of the fourth quarter of 2020, 258 hedge funds in the database of Insider Monkey held stakes worth $52 billion in the firm, up from 234 in the preceding quarter worth $42 billion.
In its Q1 2021 investor letter, Polen Capital, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ: MSFT) was one of them. Here is what the fund said:
“We have written extensively about Microsoft in recent commentaries. It was our leading contributor last year and one of our largest weightings within the Portfolio. It continues to experience business momentum through several dominant, essential, and competitively advantaged businesses, like Office 365 and Azure. The markets it competes for are enormous, which gives the company the ability to compound at scale. In the past quarter alone, the company generated over $40 billion in revenue, representing a 17% growth rate. The inherent operating leverage in Microsoft’s business model continues and led to 34% earnings growth this past quarter. Despite the broad rotation we saw in the first quarter and Microsoft’s robust performance in 2020, we think its business fundamentals continue to exhibit strength, and the stock continues to reflect the fundamentals.”
1. 51job, Inc. (NASDAQ: JOBS)
Number of Hedge Fund Holders: 16
51job, Inc. (NASDAQ: JOBS) is a Shanghai-based human resource firm that was founded in 1998. It is placed first on our list of 10 best staffing company stocks to buy. The stock has returned more than 15% to investors over the past year. The firm primarily operates in China and offers workforce solutions through several brands, including 51job.com, yingjiesheng.com, 51jingying.com, lagou.com, and 51mdd.com. It has a market cap of close to $5 billion and posted more than $560 million in annual revenue in 2020.
On May 4, 51job, Inc. (NASDAQ: JOBS) stock surged more than 14% after a proposal by DCP Services Limited, Ocean Link Partners Limited, and Rick Yan, the CEO of the company, to acquire all outstanding shares of the firm.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Pentwater Capital Management is a leading shareholder in the firm with 300,000 shares worth close to $21 million.
You can also take a peek at 10 Best Travel Stocks to Buy Right Now, and 10 Best Automotive Stocks to Invest in Now.
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Disclosure: None. 10 Best Staffing Company Stocks to Buy is originally published on Insider Monkey.
