If Growth is Low, Demand for Staffing...
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Tim Lambert
If Growth is Low, Demand for Staffing Sector will be High
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There is a recent survey of economists that predict sluggish growth ahead.

While that is bearish for some sectors, it is bullish for companies in the staffing industry.  That has already been witnessed in the performance of companies such as Team Health Holdings (NYSE: TMH), Stifel Financial Corp (NYSE: SFN), and Labor SMART (OTC: LTNC).  For Labor SMART, record revenues have been posted.  As a result, the stock is undervalued.

Team Health Holdings is up more than 50% for 2013.

On a quarterly basis, earnings-per-share growth is higher by over 30%.  It is projected to increase by that much next year by the analyst community.  The balance sheet is clean with no debt, which sends earnings into expand profitable operations.

It is much the same story for Stifel Financial Corp.

On a quarterly basis, earnings-per-share growth has soared more than 80% (chart below).  Yet the stock still sells at a discount on a price-to-book and price-to-sales basis.  What is also bullish for Stifel Financial Corp. is the high level of institutional ownership, more than 90%.  That is comforting for to know that mutual funds, pension groups, and other institutional investors with superior research resources are bullish on the stock.

There is little doubt that the demand for the demand for the goods and services of Labor SMART, Stifel Financial Corp., and Team Health Holdings will continue to be strong.

That is why there is strong revenue growth in the sector.  That will continue even if economic growth is weak, as reported by the Financial Times.  Companies do not want to commit to hiring someone full-time.  For investors, that makes for a bullish outlook for Labor SMART, Team Health Holdings, Stifel Financial Corp., and others in the staffing sector.


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