The report of the American economy creating over 200,000 new jobs last month furthers a previous article on this site about the bullish outlook for companies in the staffing industry such as PayChex (NASDAQ: PAYX), ManpowerGroup (NYSE: MAN), Kelly Services (NASDAQ: KELYA), and Labor SMART (OCTBB: LTNC).
Even with the growth in jobs, the US economy has still not recovered fully from The Great Recession. As a result, many businesses are hesitant to hire full-time workers. Companies do not want to commit themselves to the higher expenses of full-time employees.
Passage of the Affordable Care Act, or ObamaCare, makes that even more costly. ObamaCare requires that all firms with more than 50 employees working more than 30 hours a week provide each with a health insurance package. Due to the provisions of ObamaCare, it is a very expensive insurance policy. Many companies fully expect these costs to increase even more, according to an article in The Wall Street Journal.
Based on the history of government programs, there is good reason to believe that will take place in the future.
As a result, more firms are contracting for the products and services of staffing companies like PayChex, ManpowerGroup, and Labor SMART. The stock prices of Paychex and ManpowerGroup have soared for 2013. The share price for ManpowerGroup has increased more than 80%, making it a top performer on Wall Street. Labor SMART just reported record revenues for the quarter.
There is no reason to expect this to change for the future.
Labor SMART is growing in the number of offices and states in which it does business. For investors, the stock price has still not caught up with the growth of Labor SMART (chart below). The annual revenues of Labor SMART are far greater than the market capitalization, which makes Labor SMART very undervalued.