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Temporary Staffing is Entering the “Bermuda Triangle” of Margin Pressures (Part 2 of 2): Manpowergroup Inc (MAN), Trueblue Inc (TBI), Barrett Business Services, Inc. (BBSI)

Kelly’s transition, and the market’s impression of it as a solely “temp” business, resembles Barrett Business Services, Inc. (NASDAQ:BBSI) two years ago. The difference, of course, is that Kelly offers its services (aside from VMS) solely coupled with its staffing services, like Manpowergroup Inc (NYSE:MAN), but Kelly is in stronger disciplines and markets.

But if you want the strongest PEO/HR outsourcing play, it’s Barrett Business Services, Inc. (NASDAQ:BBSI) that  has cornered the market on offering all-in-one HR business services to clients: workers compensation, staff management, staffing/recruiting, and much more. For years, this stock has been a favorite of mine as the market misunderstood it as a “temp stock,” which is so, so wrong. Alas, Mr. Market has come to his senses and the stock has soared over the past 12 months, from about $17 per share to $46!

There’s still plenty of room to run–even today Barrett Business Services, Inc. (NASDAQ:BBSI) has a PEG of just .56. I think the market has Barrett right this time, and the company should keep growing because it offers its clients a truly unique service. In one fell swoop, Barrett can come in and essentially outsource an organization’s entire HR, hiring, and (largely) payroll functions. This provides incredible cost savings, flexibility and risk aversion. Simply put, Barrett Business Services, Inc. (NASDAQ:BBSI) becomes more valuable as the market becomes less stable.

Kelly, Barrett Business Services, Inc. (NASDAQ:BBSI) or Robert Half could all make outstanding plays for different reasons. Barrett offers staffing and outsourced management services, Robert Half specializes in finding very skilled labor, and Kelly gives you a little bit of both. Which is the right pick for you depends solely on your investment objectives and personal preferences.

The brighter side of the “triangle”

The market for temporary staffing is about to enter a transition; that’s just the cyclical nature of this business.  But the long-term prospects for top providers is still very bright.  The easy money, largely, has been made. It’s unlikely that all of the industry will continue at the torrid pace of recent years. It’s become a stock pickers game, and picking these company will help you navigate through the Bermuda Triangle.

The article Temporary Staffing is Entering the “Bermuda Triangle” of Margin Pressures (Part 2 of 2) originally appeared on Fool.com and is written by Adem Tahiri

and is written by Adem Tahiri

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