Paychex (NASDAQ: PAYX) just reported very strong results for the quarter. The earnings for Paychex demonstrate how robust the $100 billion workforce industry is in the United States. Doing especially well are companies in the $29 billion demand labor segment of the industry such as TrueBlue (NYSE: TBI) and Labor SMART (OCTBB: LTNC).
Specializing in payroll, benefits, and other back office support, Paychex is up almost 30% for 2013. Its profit margin is very high at 24.50%. For those looking for income, Paychex has a 3.51% dividend yield. It was recently raised.
What Labor SMART has that Paychex does not is strong growth.
In August, Labor SMART booked recorded revenues. For August 2013, revenues were 175% than those for last year. In addition, Labor SMART added over 100 more clients in August. Labor SMART is very undervalued on a revenue-to-market capitalization measure. Monthly revenues for Labor SMART are almost 40% of the market capitalization of the stock.
TrueBlue is another undervalued stock in the demand labor sector. On a price-to-sales ratio, TrueBlue is selling at a substantial discount. Each dollar of sales is discounted by one-third in the stock price of TrueBlue. The same holds true for Kelly Services (NASDAQ: KE:YA), over “Kelly Girl” fame.
There are stocks for growth, income, and value investors in the workforce sector.
Growth investors should be very pleased by the soaring revenues of Labor SMART. TrueBlue, Kelly Services, and Labor SMART are all undervalued by various measures. Paychex pays an above average dividend to those looking for income.