Calling the U.S. job market tight is an understatement, but we can find lucrative opportunities within certain hiring trends.
Jobs are growing across all sectors of the economy. In April, the unemployment rate in the U.S. was only 3.6%.
Despite the promising unemployment news, a record 11.5 million job openings remain unfilled.
Specialized sectors such as finance and tech are trying to fill more than 1.8 million of those openings.
And one company is making that happen — while growing its own business at a nice clip along the way.
Using Chief Investment Strategist Adam O’Dell’s proprietary six-factor Stock Power Ratings system, I found a “Strong Bullish” stock that helps employers find highly qualified workers in both of those sectors:
- It grew its revenue 13% in 2021.
- The stock is trading just off its 52-week high.
- It’s in the top 4% of all stocks we rate.
Here’s why this staffing stock will continue its strong performance in 2022 and beyond.
Staffing Shortage Creates Opportunity for Investors
According to a CompTIA study, the tech sector should add 178,000 new jobs in 2022add 178,000 new jobs this year.
This is in addition to the 3.6 million tech job postings listed by U.S. employers in 2021.
The need for highly skilled employees in the tech and finance sectors creates a great opportunity for companies providing those staffing needs:
The chart above shows the employment placement services industry’s actual and estimated revenue.
In 2020, the industry recorded $23.4 billion in revenue. That is expected to grow 15.8% by 2024 to $27.1 billion.
Bottom line: The increased need for skilled labor in tech and finance will benefit companies finding those workers.
Outstanding Quality and Great Momentum: Kforce Inc. Staffing Stock
There are a record number of job openings in the U.S., despite unemployment being at just 3.6%.
Kforce Inc. (Nasdaq: KFRC) is a Florida-based staffing agency that finds short- and long-term employees in the tech and finance fields.
It provides employees for specialized fields including:
- Artificial intelligence.
- Project management.
- Insurance.
- Network architecture.
- Business intelligence analysis.
Even with low unemployment, KFRC revenue growth has been strong:
In 2020, KFRC had total annual revenue of $1.3 billion. That grew 13% to $1.5 billion in 2021.
By 2023, the company’s annual revenue is estimated to jump to $1.8 billion — a 30% increase over 2020.
Now let’s look at how this staffing stock has performed.
In the last 12 months, KFRC stock is up 18.7%. It reached a 52-week high in November, but pared some of those gains during the recent broad market sell-off.
The stock is testing some resistance at $75 per share, which is only $5 off that 52-week high.
The stock continues to outperform its broader professional services industry peers — which are down 4.3% over the same 12 months.
Kforce Inc. Stock Rating
Using Adam’s six-factor Stock Power Ratings system, Kforce Inc. stock scores a 96 overall.
That means we’re “Strong Bullish” on the stock and expect it to beat the broader market by at least three times over the next 12 months.
KFRC rates in the green on five of our six factors:
- Quality — Returns on assets, equity and investment are all minimal in the professional services industry, but Kforce boasts double-digit wins on the three metrics. KFRC scores a 94 on quality.
- Momentum — Since this time a year ago, Kforce’s stock price is up more than 13%. KFRC scores an 88 on momentum.
- Volatility — Kforce is trading a bit sideways since rebounding off a drop in February. KFRC scores an 80 on volatility.
- Growth — KFRC scores a 79 on value, with a one-year earnings-per-share growth rate of 35.3% and a 14.8% growth in sales from its last quarter.
- Size — With a market cap of $1.51 billion, KFRC is right in the middle of the pack on size, where it scores a 68.
KFRC earns a “Neutral” 50 on value, but its price-to-sales ratio is 0.9, while its industry peer average is 2.9. Its price-to-earnings ratio is also lower than the industry average.
Bottom line: Unemployment is low, but companies are still looking for highly skilled people to fill a record number of job openings.
While the retail sector gets the headlines in terms of the labor shortage, more specialized professions like tech and finance are still in dire need of qualified workers.
This is why KFRC is a must-have for your portfolio.
Safe trading,
Matt Clark, CMSA®
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. He’s also a certified Capital Markets and Securities Analyst through the Corporate Finance Institute. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.
