The U.S. economy added 850,000 jobs in June — much better than the 700,000 jobs expected by analysts — but there are still fears that America is facing a significant labor shortage as employers scramble to find workers coming out of the pandemic. In particular, restaurants, bars, mom-and-pop stores and hotels are struggling as they reopen and compete for staff. A number of companies, ranging from delivery giant Fedex (NYSE:FDX) to online pet retailer Chewy (NYSE:CHWY), have raised concerns about the impact that this shortage will have on their operations. However, some stocks to buy do not carry this same burden.
While many companies are sure to be negatively impacted by a dwindling pool of available workers, there are other organizations that are likely to be immune to it. Whether it’s because they operate in a less labor-intensive industry or have most of their employees based outside of the country, these names are still positioned to perform well in the near term.
So, without further ado, here are are seven stocks to buy for their immunity to the U.S. labor shortage.
- Medtronic (NYSE:MDT)
- Nike (NYSE:NKE)
- Apple (NASDAQ:AAPL)
- Seagate Technologies (NASDAQ:STX)
- Walmart (NYSE:WMT)
- IBM (NYSE:IBM)
- Levi Strauss & Co. (NYSE:LEVI)
Stocks to Buy for the Labor Shortage: Medtronic (MDT)
Medtronic is a heck of a company. Founded in 1949, it makes medical devices to treat conditions ranging from heart disease to diabetes. The company’s products have saved countless lives. However, while Medtronic retains an “executive headquarters” outside of Minneapolis, it’s actually American in name only these days. Since 2007, MDT has been headquartered in Dublin, a move it made for tax purposes (Ireland’s corporate tax rate is 12.5%). It remains the largest corporate tax inversion in U.S. history.
Additionally, Medtronic now does very little manufacturing in the States; today, the majority of its devices are manufactured in China, Malaysia and Mexico. In fact, the company paid a $4.4 million fine to the U.S. Department of Justice (DoJ) back in 2015 when it was caught relabeling spinal surgery devices it had made in China as “Manufactured in Memphis, Tennessee.” The company then sold these devices to the U.S. government for use with veterans and active-duty soldiers.
My point? With most of its operations now based in other countries, the U.S. labor shortage should not impact Medtronic much. So far in 2021, MDT stock has risen roughly 9%. This pick of the stocks to buy now trades at around $127 per share.
Next up on this list of stocks to buy, Nike is another great American company that has shifted almost all of its manufacturing offshore. Today, all of this Oregon-based name’s sneakers are made overseas, mostly in China. More of its products are also manufactured at plants in Thailand, South Korea, Vietnam and India. While Nike has received a considerable amount of scrutiny and backlash over these overseas manufacturing practices, the company maintains that it’s forced to operate abroad due to cheaper labor costs.
Of course, at home in the United States, Nike’s retail operations could certainly be impacted by a labor shortage. However, the company has been pushing more of its retail sales online, using the Covid-19 pandemic to direct consumers to its website rather than its retail outlets, most of which were forced to close over the past year. In fact, digital sales at Nike rose 47% for the full-year 2020. Now, the company says it’s on track to have 50% of its revenues come from digital sales in the near future, alleviating he pressure to maintain and staff a big network of retail locations.
Today, NKE stock is up nearly 15% year-to-date (YTD) at about $162 per share.
Stocks to Buy for the Labor Shortage: Apple (AAPL)
True, the U.S. labor shortage will no doubt impact a lot of sectors of the economy. However, it’s not likely to have a major effect on consumer technology names like Apple. Why? While Apple is getting into banking and developing content for its streaming platform, the world’s biggest company by market capitalization still primarily designs and manufactures consumer electronics like its iPhones, iPads and Apple Watches. Those items — the bread and butter for AAPL — are not dependent on American workers. They’re made in China. In fact, the company’s last U.S. manufacturing plant closed in 2004.
Of course, Apple’s global headquarters still remain firmly rooted in Silicon Valley — at its head office, the company employs about 12,000 people. However, that’s less than 10% of the 147,000 people which the company employ worldwide. Plus, the company’s customer base is becoming more and more global as well. Today, two-thirds (67%) of its sales come from outside the United States.
Currently, AAPL stock has climbed 12.28% YTD. This pick of the stocks to buy now sits at nearly $149 per share.
Seagate Technologies (STX)
Data storage and hard-drive manufacturer Seagate Technologies has seen its stock perform exceptionally well this year. In fact, so far in 2021, STX stock is up an impressive 44% at almost $90 per share.
Like many successful U.S. technology firms, Seagate got its start in Silicon Valley. However, since 2010, the company has actually been based in Ireland for tax purposes. Plus, the company’s main innovation center — where it creates and develops various data storage devices — is actually based in Tel Aviv, Israel. Finally, Seagate Technologies’ products are mostly manufactured throughout Asia.
As such, this pick of the stocks to buy should not be adversely impacted by a labor shortage. This is also at a time when demand for its data storage products are hitting an all-time high. During Q1 of this year, Seagate announced record sales of its high-capacity data storage drives, which helped push the company’s revenue to $2.73 billion.
Stocks to Buy for the Labor Shortage: Walmart (WMT)
Walmart is another retailer on this list of stocks to buy that might have some trouble staffing its retail outlets at a local level across the U.S. due to the labor shortage. However, like Nike and others, Walmart is also smartly focused on increasing its online sales — especially as part of its quest to take on Amazon (NASDAQ:AMZN). To be sure, Walmart’s e-commerce sales grew 79% year-over-year (YOY) in the quarter ended on Jan. 31. The company also reported total revenue of $559.15 billion for the year.
Plus, when it comes to manufacturing, Walmart conducts business almost entirely overseas. In fact, the company makes goods at a bevy of manufacturing facilities located in mainland China. And, although Walmart has made pledges to move some of its operations back to the U.S. and hire American workers, WMT continues to manufacture and source most of its products overseas.
Today, WMT stock is down 2% YTD at around $141 per share.
Next up on this list of stocks to buy, IBM is another iconic American tech company that is unlikely to be significantly impacted by a U.S. labor shortage because little of its operations are based in the country today. In fact, IBM now employs more workers in India than it does in the States, advertising that it has created a “global workforce.” Additionally, most of the company’s products — ranging from robotics to cloud computing — are run out of India and China.
IBM also likes to state that it passes the savings that it achieves running operations outside the U.S. onto customers. Regardless of how beneficial that is, however, the company and its stock appear to be insulated from any work-related issues that may arise in the States. After all, IBM stock has been a winner in 2021 following years of stagnation.
More specifically, over the past five years, IBM stock has fallen about 13%. However, the company’s share price is up nearly 11% YTD at a little over $139. This pick of the stocks to buy has actually enjoyed a breakout since the end of March.
Stocks to Buy for the Labor Shortage: Levi Strauss & Co. (LEVI)
Last up on this list of stocks to buy, Levi’s blue jeans and denim jackets are maybe as American as apple pie and baseball. However, while most of the company’s denim continues to be sourced from North Carolina, the majority of its products are actually now made outside the United States. In fact, nearly 60% of the company’s 14,800 employees today are based in Europe or Asia while only about 40% work in the States.
With those kinds of numbers, Levi Strauss is unlikely to experience any major hardship due to a U.S. labor shortage. And, Levi’s strategy of increasingly operating overseas appears to be paying off. The company’s most recent financial earnings blew away analyst expectations, with revenue of $1.28 billion and earnings per share (EPS) of 23 cents. The company even raised its forward guidance, saying it expects 2021 sales to exceed pre-pandemic levels due to strong demand from consumers in China. Finally, the company also raised its dividend to 8 cents for Q3 of this year.
Year-to-date, LEVI stock is up 48% to well over $29 per share.
On the date of publication, Joel Baglole held long positions in MDT and AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.