Profit from Being Nimble in the Stock Market

TrueBlue IncIn a recent column in Forbes magazine, “Stocks Be Nimble Stocks Be Cheap,” Jim Oberweis, President of Oberweis Asset Management, wrote that companies “…succeed by anticipating the needs of a changing world.  Secular shifts in technology and government regulation, for example, cause uncertainties and disrupt markets.  This creates new growth opportunities.”


Investing in Companies That Focus on Changes

Oberweiss detailed how appealing the “temporary staffing and outsourced human resources has now become.”  That was the focus of profiting from changes in the American workplace.  The Forbes article from Oberweis adds to the bullish outlook for the sector and firms such as Paychex (NASDAQ: PAYX), TrueBlue (NYSE: TBI), and Labor SMART (OCTBB: LTNC).

In his article, Oberweis mentions On Assignment (NASDAQ: ASGN) and Barret Business Services  (NASDAQ: BBSI).  He notes that each benefit as “…many companies are choosing to the meet the recovery in demand by using temps, often called ‘project’ work.”  Paychex operates in the same professional services sector of the $100 billion staffing industry as On Assignment ad Barret Business Services.

The demand labor segment of the staffing industry is at $29 billion and growing.

That can be seen in the stock price performance of TrueBlue Inc and the explosion in revenue for Labor SMART.  The share price for TrueBlue Inc is up more than 56% for 2013.  On a quarterly basis, sales growth and earnings-per-share growth is projected is increasing by in the double digits.  For the next year, the analyst community projects that earnings-per-share will rise by more than 26% for TrueBlue Inc.

TBI Stock Price YTD

It has been the same story of growth for Labor SMART, too.

Revenues for the third quarter were at a record level.  So undervalued is Labor SMART that its third quarter revenues were more than the market capitalization of the stock.  The client list too grew for Labor SMART, evincing that the revenue growth is sustainable and robust.


Other Changes Beyond Staffing

Robust and sustainable should the demand for the services of firms in the staffing and outsourcing industry, too.  With the Affordable Care Act, or Obamacare, businesses in the United States do not want to hire full-time workers due to the higher costs, as we discussed in Profiting from Obamacare.  A provision of Obamacare mandates that companies with more than 50 employees have to provide workers with health insurance.

That will increase the cost of each full-time worker for a business.  Many companies such as Home Depot (NYSE: HD), Sears Holdings (NASDAQ: SHLD), and IBM (NYSE: IBM), have already acted to reduce expenses in this area, as a result.  The future will feature more utilizing the services of staffing companies.

Stocks such as Pachex and TrueBlue Inc have done very well, rewarding investors with double digit returns for 2013.

Investors should expect that to continue as firms such as Labor SMART, On Assignment and Barrett Business Services continue to grow.  While the economy is not growing that much in the United States, the reasons for utilizing the services of staffing industry firms is, especially with Obamacare coming into effect.  There should be a similar rise in the stock prices for these companies, as advised by Oberweis.

What other trends do you see in the economy that we can profit from?

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  1. says

    Nice tip. That’s all it is, though. And I don’t act on tips. I keep my assets diversified across all sectors by owning the entire market in the low-cost passive Total Stock Market index fund. Individual stocks are too volatile for me.

  2. says

    Companies are resisting hiring people until they really need to. The solution is to use staffing companies until they really need to add someone. This is a growth industry!

  3. says

    I agree with what Krant has said. It’s so true. Adding somebody to a company can be costly; staffing agencies don’t require the company to pay for benefits etc. There are always going to be trends in the markets. I am not an individual stock person either, I’m mainly invested in mutual funds.

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