President Donald Trump met a few chief executives of the country’s biggest manufacturers and pledged to return jobs to millions in the U.S. His campaign promises, including a job-boosting tax or infrastructure program, is likely to reverse a decade-long decline in factory jobs.
Staffing companies stand to gain the most from such initiatives. Jobless claims staying at its lowest level in more than four decades, unemployment rate declining considerably and the economy adding jobs at a steady clip, also bode well for such companies.
Trump Plans to Bring Back Millions of Jobs
Trump turned to manufacturing executives and powerful business leaders, praising their efforts toward generating jobs in the U.S. and pledged to bring back jobs, which corporate America has outsourcedto other countries in search of cheaper labor.
In his first month in office, Trump insisted many top executives to hire in the U.S., while he promised to roll out favorable proposals, including a plan to overhaul the tax code and increase in infrastructure spending that was part of his 2016 presidential campaign promises. These measures will eventually help companies create jobs. He also touched on his plans of deporting illegal immigrants to Mexico, while Secretary of State Rex Tillerson is already in Mexico on what Trump described as a “tough trip”.
U.S. has lost more than five million manufacturing jobs since 2000, mostly due to lower wages, automation and foreign competition. Many companies look at trimming their employment costs by moving jobs to places were workers are paid a lot less than that in the U.S. Trump added that a lot of manufacturing jobs were lost since the U.S. joined the North American Free Trade Agreement in 1994, while around 70,000 factories were shut down since China joined the World Trade Organization almost 16 years ago.
Manufacturing Executives Ecstatic
Several CEO’s, who met Trump, are part of the coalition that supports the so-called border adjustment tax, which includes imposing a 20% tax on goods imported while providing write-offs for goods that are exported. Such initiatives by Trump to bring more jobs back have elated many executives.
Chief executive of Lockheed Martin Corporation (LMT), Marillyn A. Hewson said that she was “very excited about the fact that this is one of the first actions that Trump wants to take on”. The President during the meeting with 24 corporate chieftains, in fact, singled out Greg Hayes of United Technologies Corporation (UTX) praising its decision last year to keep hundreds of jobs in the U.S.
Initial Claims Point at Strong Jobs Market
The labor market, in the meantime, is stronger than it has been in decades. The number of Americans filing for unemployment benefits touched its lowest point in more than four decades. Initial claims rose 6,000 to 244,000 last week, according to the Labor Department. But, the four-week average decreased by 4,000 to 241,000, the lowest since July 21, 1973. For the 103rd straight week, jobless claims, in fact, stayed below the 300,000 mark, the longest stretch to be within that figure since 1970.
Lest we forget that the unemployment rate has dropped to an impressive 4.8%, while the labor market is close to or at full employment level. Unemployment figures continue to decline as many companies are searching for jobs and are also holding on to their employees as the economy continues to gather steam at a steady pace. The U.S. economy had already added 227,000 jobs during the month of January, the best monthly job gains since September (read more: 5 Stocks to Buy on Big New Jobs Numbers).
3 Best Staffing Stocks to Buy Now
Banking on such aforementioned encouraging trends, we present three staffing stocks that boast a Zacks Rank #1 (Strong Buy) and are well poised to grow in the near term. Such stocks also flaunt a VGM score of ‘A’ or ‘B’. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
The optimism in the staffing space is also confirmed by its solid Zacks Industry Rank in the top 26%, indicating continued hiring and more job opportunities. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
Cross Country Healthcare, Inc. (CCRN) is engaged in providing healthcare recruiting, staffing and workforce solutions. Cross Country Healthcare has a VGM Score of ‘B’. The company’s estimated earnings growth rate for this year is 14.4%, more than the industry’s return of 13.9%.
The Zacks Consensus Estimate for its current year earnings increased 4.4% over the last 60 days. Shares of Cross Country Healthcare broke into a new 52-week high on Feb 23, hitting a peak of $16.38. Bullish investors view a company hitting its highest price in a year as a sign of momentum and may interpret it as a signal to buy.
Kforce Inc. (KFRC) is engaged in providing professional and technical specialty staffing services and solutions. Kforce has a VGM Score of ‘A’. The company’s estimated earnings growth rate for this year is 27%, more than the industry’s return of 12.7%.
The Zacks Consensus Estimate for its current year earnings increased 7.4% over the last 60 days. After the company reported a 12% earnings beat for the fourth quarter, analysts have raised the company’s full-year estimates from $1.48 to $1.59. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Randstad Holding NV (RANJY), a staffing and recruitment company, provides solutions in the field of flexible work and human resources (HR) services. Randstad Holding has a VGM Score of ‘A’. The company’s estimated earnings growth rate for this year is 13.4%, more than the industry’s return of 12.7%.
The Zacks Consensus Estimate for its current year earnings increased 12.3% over the last 60 days (read more: Why Randstad Holding Could Be a Top Value Stock Pick).
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