Meet the Moneyball “Hot 100”

My premise is simple…

When a stock starts to surge, it’s often because the underlying business is growing.

And before a business can meaningfully grow its bottom line, it’s often going to grow its payroll … because you need a larger workforce to handle all this new business.

So by tracking the rate of hiring across the individual companies of the S&P 500, we have what could become a strong indicator of each stock’s future prospects.

That’s what we’ll be diving into today:

Video transcript:

I’m Andrew Zatlin, welcome to Moneyball Economics.

Over the past few months, we’ve been running a live experiment. See, I believe that there is a strong relationship between a company’s hiring and their stock price.

I mean, the idea is pretty basic, right?

A company that, for example, is accelerating their hiring is doing that because their business is accelerating and the expectation should be that the stock price is going to go up as well in response to that accelerating business. Okay, so far so good.

To test that theory in real time, each month over the past couple of months at the beginning of the month, I’ve shared with you a couple of companies that are exhibiting that hyperbolic hiring growth and we’ve been tracking how that gets reflected in the stock price and we’ve had some really good, good results.

So first of all, thank you very much to everyone who’s emailed me and given me all that positive feedback about this experiment.

And thanks to those of you who reached out and asked me to expand that base. So today I’m going to introduce to you the Hot 100. We’re going to take this experiment and we’re now going to kick it into overdrive. But before I do that, I want to share with you a little background, sort of a state of the union of hiring and what it says about the economy and stock market going forward, because we are very much in a situation where a rising tide will lift all boats.

And if we’ve got a hundred companies that are poised to benefit especially, well, let’s take a look. Now, big picture background. If we look at conventional data like payroll data, we are going to see a major bullish trend reversal. Go back to 2024. In 2024, we hired about private sector about 1.2, 1.5 million people.

Last year, that collapsed.

A couple hundred thousand people were hired. Well, this year we’re already on track to rebound and essentially hire as many people as we did in 2024. So that’s 2024 here a crash last year and now a sharp rebound. And as you know, when companies are hiring a lot more, it’s because they are seeing a lot more business.

Companies are essentially investing in America and saying, we believe that this economy is growing and we’re going to have to ramp up to deal with that business activity. That means economic expansion, that means stock market expansion.

And it’s not just the conventional data that’s telling me this. As you know, I harness my own labor data and I have two kind of data sets. One looks at the smaller mom and pop kind of stores and they’re hiring. The other looks at these larger companies, especially S&P 500 companies.

Right now getting a little bit of a consistent but slightly different signal. When I say consistent but slightly different, I’m talking about Iran. Iran, higher oil prices, disruption to supply chains. If you’re a big company, you can navigate that a lot easier.

But if you’re a smaller company, it’s a little stickier. So smaller companies are responding with a fairly deep pause in their hiring. Bigger companies, a smaller pause doesn’t matter.

Combined, I am seeing significant acceleration in hiring. For example, if I look exclusively at the S&P 500, this chart shows you hiring year over year. And as you can see, year over year has accelerated over the past couple of months. We are now in hyperbolic hiring mode and historically that means the stock market is going to enter that same kind of rapid growth mode. So let’s talk about how to take advantage of that.

I’m looking at hundreds, almost 800 companies that are publicly traded that I track their specific hiring. And I’ve done a lot of looking back to identify the companies that exhibit one important and critical key characteristic.

Historically speaking, is there a strong correlation between what’s going on with their hiring and what’s going on with the stock price? Whether it’s going up in the hiring, going down, does it matter? Are they exhibiting a historically strong correlation? Meaning if I can see companies that are accelerating in their hiring, I’m likely to see their stock price also accelerating.

And that is what I want to present to you. I want to present to you a hundred companies that first of all passed that first test of is there a strong correlation between what goes on with stock price and hiring? And then secondly, is their hiring going up?

Got a hundred companies, that’s right. A hundred publicly traded companies where their hiring is now suddenly going hyperbolic. And some of them, well, the stock price seems to be pricing that in, but when you’ve got growth, there could be a lot more growth in the tank coming down, so there could still be that upside surprise.

At the same time, some of these companies, they’re surging with their hiring. And I’m not talking one or two months. I mean, total trend where over the past four, five, six months, their hiring has been going up and to the right, but the stock price doesn’t seem to have priced it in. So there’s an opportunity there for the stock price to surge based on the catch-up.

Okay. A hundred companies, what we’re going to do is again, I’m not taking a deep dive. I’m not filtering. I’m not saying, “Well, this sector or this sector’s going up,” or, “Hey, this company’s enjoying the following thing,” or, “I’m not going to assess.

I’m not going to analyze or share any opinions about any of these companies.” One dimensional. Is their hiring going up? If so, this is the hot 100 and over the next three to six months, let’s take a look at what happens to their stock prices.

What we’re looking for is not just are they moving at the same pace as the general stock market growth. We want to see if they grow even more because to cut to the chase, it’s not just about the picking your targets for investing. It’s all about timing the entry and exit.

Now, these companies we may be early into. It may take a quarter or two, and that’s why three to six months. It may take a quarter or two for the stock market to catch up to what’s really going on in their business.

Let’s see what happens, folks.

We’re in it to win it. Zatlin out.