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Finance

2 Staffing Stocks to Buy as the Labor Market Heals

The United States labor market is gradually reviving from  the COVID-19-pandemic-driven lows of last year. Unemployment rates have been falling since mid-2020, hitting 6.2% in February, down from 14.7% in April last year.

According to an Employment Outlook Survey based on a sample of over 42,000 employers released by ManpowerGroup Inc. (MAN), employers in all 12 U.S. industries reported positive outlooks, with the strongest hiring activity forecast in the Leisure & Hospitality sector (+27%), Transportation & Utilities (+23%) and Wholesale & Retail Trade (+22%).

As a result, staffing companies  Randstad NV (RANJY) and MAN are expected to grow further in the near term, driven by the rising demand for workers across the country.  These companies are witnessing a solid rise in financials over the last two quarters and are expected to reach pre-pandemic levels in the current quarter.

Click here to check out our Industrial Sector Report for 2021

Randstad NV (RANJY)

Based in the Netherlands, RANJY is a staffing services provider. It has three primary service concepts: Staffing, Inhouse services and Professionals. The company also offers on-site solutions for managing clients’ workforces with specific skill sets and a fluctuating level of demand for the fast-moving consumer goods, automotive, life sciences, and logistics, and administrative segments, among others. RANJY also owns twago, an online freelance marketplace.

The company appointed Sander van’t Noordende to its Supervisory Board on March 23for a four-year term. RANJY’s board of directors approved a regular dividend of €1.62  per each ordinary share, payable on April 6, and a special dividend of €1.62 per ordinary share payable on October 4. Also, on March 11, the company’s Randstad RiseSmart, a leading global outplacement and talent mobility provider, completed its SOC 2 Type II audit, performed by licensed CPA firm KirkpatrickPrice, which validated its unwavering commitment to data privacy and security.

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For the fourth quarter (ended December 31, 2020) RANJY’s revenue increased more than 10% sequentially to €5.69 billion. Its gross profit has increased 13.1% sequentially to €1.11 billion. The company’s operating profit came in at €215 million for the quarter, up 36.9% sequentially. RANJY’s net income of €208 million for the fourth quarter represents a 24.6% rise year-over-year. Also, its EPS has increased 24.7% year-over-year to €1.11.

A $6.54 billion consensus revenue estimate for the quarter ending June 30, 2021 represents a 27.9% increase on a year-over-year basis. The stock has gained 99.4% over the past year and closed yesterday’s trading session at $34.61.

RANJY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

The stock also has a B grade for Growth, Value, and Stability. We have also graded RANJY for Momentum, Quality, and Sentiment. Click here to access all RANJY’s ratings.

RANJY is ranked #4 of 19 stocks in the A-rated Outsourcing – Staffing Services industry.

ManpowerGroup Inc. (MAN)

Founded in 1948, MAN provides workforce solutions and services and operates through its six segments — America, Southern Europe, Northern Europe, Asia Pacific Middle East (APME), Right Management, and Corporate. The company offers recruitment services and administrative and industrial positions as well under its Manpower and Experis brands. It also offers various assessment services, career management, and outsourcing services related to human resources functions.

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On March 25,  MAN announced that it had been named a global ‘Pacesetter’ by industry Analyst ALM for its deep workforce insight and ability to design and deliver workforce management services that enable agility and resilience in continued uncertainty. The company was also honored with the 3M Supplier of the Year Award in December 2020 in recognition of its contribution to achieving 3M’s mission and improving its competitiveness.

The company’s revenues increased 10.3% sequentially to $5.05 billion for the fourth quarter, ended December 31, 2020. MAN’s gross profit has increased 10.2% sequentially to $798.90 million. Its operating profit came in at $138.30 million, which represents a 124.5% improvement sequentially, and its net earnings were  $76.20 million, up 639.8% sequentially. Also,  the company’s EPS of $1.48 surpassed a consensus estimate by 31%.

Analysts expect MAN’s EPS for the next quarter, ending June 30, 2021, to be $1.11, representing an increase of 516.7% year-over-year. The company surpassed the consensus EPS estimate in each of the trailing four quarters. For the next quarter, analysts expect MAN’s revenue to be $4.74 billion, representing a 26.6% rise from the prior year period. The stock has rallied 74.3% over the past year to close yesterday’s trading session at $100.42.

MAN’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary ratings system.

The stock has a B grade for Value. In addition to the POWR Ratings grades we’ve just highlighted, one can see MAN’s ratings for Growth, Sentiment, Quality, Momentum, and Stability here. MAN is ranked #7 in the same industry.

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The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

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RANJY shares were trading at $34.99 per share on Monday afternoon, up $0.38 (+1.10%). Year-to-date, RANJY has gained 9.40%, versus a 6.38% rise in the benchmark S&P 500 index during the same period.

About the Author: Sweta Vijayan

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More…

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