One stock market industry that should fare pretty well in the second half of the year is the staffing and human resources business.
As I have stated several times recently, in spite of recent market fears, I expect the Fed to keep the QE pedal mashed to the floor until the economy shows it can grow without training wheels. We are seeing some signs of improvement in the job market, but it has been slow and lumpy at best. Companies are being cautious about hiring and are increasingly turning to temporary staffing and HR companies to effectively manage their work force.
I also think the stock market rally will resume, but the focus will narrow to the very best companies. The large institutional investors who possess the firepower to move markets and stock prices want to own companies with solid fundamentals and proven growth potential. That’s why it’s important to use Portfolio Grader to help you find the best candidates, even in the strongest of sectors.
Two of the industry’s stocks in particular are especially attractive given their attachment to a sector with hot prospects: healthcare.
AMN Healthcare Services (AHS) is a stock that receives high marks and is poised to benefit from two strong trends, as it not only provides staffing, but staffing for the healthcare industry. AHS is seeing strong demand from skilled nursing and allied healthcare temporary hiring, as well as permanent physician placements, as the demand for skilled medical services continues to rise. A lack of skilled nurses combined with an aging population should provide powerful tailwinds for AMN Healthcare and allow it to grow earnings at a solid pace for the rest of 2013 and well into next year. AHS has been blowing away Wall Street estimates, posting four consecutive positive earnings surprises. This stock has held the highest possible grade in Portfolio Grader since it was upgraded to an “A” back in November. AHS is a “strong buy,” and should be for some time to come.
Team Health Holdings (TMH) is in a similar business and also has boasted an “A” grade from Portfolio Grader ever since its January upgrade, indicating it’s a “strong buy.” Team Health has been making smart acquisitions of smaller health human resources and staffing companies, which has been driving solid top-line growth. The company has been able to maintain stable margins despite its M&A, so TMH probably will continue this strategy in the remaining months of 2013 and beyond.
While healthcare has been the fastest-growing subset of the human resources and staffing industry, I want to mention that more generalized providers such as Insperity (NSP) and Kelly Services (KELYA) have been upgraded to “B” rankings in recent weeks as fundamentals have improved. Both are “buy”-rated and continue to see their business strengthen … and they could be “strong buys” before much longer.
Use Portfolio Grader to keep an eye on the HR and staffing sector. Business is getting better, opening the possibility of strong gains in the second half of the year.
Louis Navellier is the editor of Blue Chip Growth.