Weekly Jobless Claims Plunge To 45-Year Low: 5 Staffing Picks

U.S. Labor Department’s weekly jobless claims data for the week ended Mar 24 provides fresh evidence that the labor market remains robust. In fact, the metric dropped to its lowest level since January 1973. The U.S. labor market is a picture of health at the moment fueled by strong job additions and record-low unemployment.

Meanwhile, the Fed recently revised 2018 GDP projection to 2.7% from earlier estimate of 2.5%, highlighting the strong fundamentals of the economy. For the month of February, U.S. Commerce Department data displayed robust business spending at US factories for expensive durable items such as machinery and vehicles.

Strong business confidence is likely to aid the enterprises in recruiting more manpower. Consequently, good staffing stocks are lucrative investment options at the moment.

Jobless Claims Continue to Decline

On Mar 29, the U.S. Labor Department data revealed that weekly jobless claims decreased 12,000 to a seasonally adjusted 215,000 for the week ended Mar 24. This was better than the consensus estimate of 228,000 and the lowest level experienced in 45 years.

This was the 158th consecutive week that the number of Americans filing for unemployment benefits remained below the 300,000 threshold. The continued decline in weekly jobless claims data exhibits its longest trend since 1970.

The four-week moving average of initial claims dropped 500 to 224,500 for the week ended Mar 24. This metric is considered a better measure of labor market trends as it eliminates weekly fluctuations. Likewise, the four-week moving average of continuing claims declined 12,750 to 1.86 million. This was the lowest level witnessed since November 2017.

Labor Market to Remain Solid

Currently, the U.S. unemployment rate is around 4.1%, itself a 17-year low. The Fed’s latest projection for the labor market has added a little extra sweetness to the economic scenario. Also, the central bank reduced its 2018 unemployment rate estimate to 3.8% in March 2018 from the earlier estimate of 3.9% released in December 2017.

Also, the unemployment rate is now projected to remain stable at 3.6% in 2019 and 2020 better than the central bank’s earlier projection of 3.9% and 4%, respectively. This indicates that the U.S. labor market will maintain near full employment levels over 2018-2020. (Read More: Fed Raises Economic Outlook: 5 Top-Ranked Momentum Picks)

How to Identify the Potential Winners?

An almost saturated labor market is likely to spur wage growth in the second quarter of 2018. This in turn will result in an increase in consumer spending, which slowed down since the beginning of 2018. Consumer spending accounts for about 70% of U.S. economic activity. Consequently, higher consumer spending will result in to higher growth in GDP.

At this stage, adding staffing stocks to your portfolio makes good sense. However, picking winning stocks can be a difficult task.

This is where our VGM Score comes in handy. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select the winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score.

We have narrowed down our search to the following stocks, each of which has a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a good VGM Score.

Shuffle Your Portfolio: 5 Key Picks

Chart below shows the price performance of our five picks in the last six months.

Korn/Ferry International (NYSE:KFY) is the world's leading and largest executive recruitment firm with the broadest global presence in the executive recruitment industry. It has a Zacks Rank #1 and a VGM Score of B.

Korn/Ferry International has expected earnings growth of 17.4% for current year. The Zacks Consensus Estimate for the current year has improved by 5.6% over the last 60 days.

Kforce Inc. (NASDAQ:KFRC) is a full-service, web-based specialty staffing firm providing flexible and permanent staffing solutions for organizations and career management for individuals. The stock has a Zacks Rank #1 and a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kforce has expected earnings growth of 35.7% for current year. The Zacks Consensus Estimate for the current year has improved by 21% over the last 60 days.

Insperity Inc. (NYSE:NSP) is engaged in providing an array of human resources and business solutions. It has a Zacks Rank #2 and a VGM Score of A.

Insperity has expected earnings growth of 24.1% for current year. The Zacks Consensus Estimate for the current year has improved by 14.7% over the last 60 days.

On Assignment Inc. (NYSE:ASGN) is one of the foremost providers of in-demand, highly skilled professionals in the technology, digital, creative, healthcare and life sciences sectors. It has a Zacks Rank #2 and a VGM Score of B.

On Assignment has expected earnings growth of 23.3% for current year. The Zacks Consensus Estimate for the current year has improved by 13.3% over the last 60 days.

TrueBlue Inc. (NYSE:TBI) is a leading provider of specialized workforce solutions. It helps clients to improve growth and performance by providing staffing, workforce management and recruitment process outsourcing solutions. It has a Zacks Rank #2 and a VGM Score of A.

TrueBlue has expected earnings growth of 27% for current year. The Zacks Consensus Estimate for the current year has improved by 18.8% over the last 60 days.

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