H&R Block (NYSE:HRB) is a strange stock. The company basically bleeds money all year long until it rakes in huge profits during tax season. Those numbers make or break the company. It’s the equivalent of getting an annual report instead of a quarterly one, and making your investing decision based on that.
The good news is that tax time is right around the corner — and the better news is that with more people employed and more people who will have income taxes to report, business could be up for H&R Block. At least that’s what appears to be the case, judging by recent news that unemployment is at a three-year-low 8.3% and judging by a 33% surge in HRB stock across the past 12 months.
Like Automatic Data Processing (NASDAQ:ADP), which processes payroll info for businesses, H&R Block is in many ways dependent on the broader business environment to make its money. That means you have growth potential in this midcap, and numbers should improve as the economy does in the months and years ahead.
Worried about buying H&R Block too soon? Well, consider the 4.6% yield. Even if you move sideways for a while, that’s a pretty good hedge for your portfolio to ensure you don’t miss the growth prompted by a broader recovery.