With the employer mandate of having to provide health insurance to full-time workers under the Affordable Care Act, or ObamaCare, fast approaching, The White House is denying assertions that it is resulting in more part-time jobs as companies move to evade the higher costs.
But in a recent interview in The Wall Street Journal, Bob Funk, founder of Express Employment Services, the fifth-largest employment agency in the United States, stated, "ObamaCare has been an absolute boon for my business." He furthered in the piece by Stephen Moore, "Bob Funk: Where the Jobs Are-and How to Get One," that, "I'm making a lot of money thanks to that law. We're up 8% this year."
Express Employment Services is hardly the only company in the $100 billion staffing industry sector to be "making a lot of money" thanks to changes in the American economy. In the group, there are stocks suitable for income, growth and value investors.
For income investors, there is Paychex (NASDAQ: PAYX), the biggest in the sector with a market cap of around $15 billion; and a dividend yield over 3%. Paychex recently increased its dividend by 6.2%. CDI Corp. (NYSE: CDI) also has a dividend of over 3%, more than 50% higher than the average for a member of the Standard & Poor's Index.
Growth is booming in the $29 billion demand labor sector of the staffing industry, True Blue (NYSE: TBI) is up more than 56% this year. Both sales growth and earnings-per-share growth are surging by nearly 20% on a quarterly basis.
Labor SMART (OTCBB: LTNC), another firm in the demand labor sector, just reported record revenue growth for August. Revenues for August 2013 were 175% higher than those for last year. In addition to the soaring revenues, Labor SMART added over 100 more clients last month, too.
Value investors have TrueBlue, Labor SMART, and Kelly Services (NASDAQ: KELYA). All are undervalued, with the price-to-sales ratio for Kelly Services being just 0.14. The price-to-sales ratio for TrueBlue is 0.65. Labor SMART is undervalued based on a revenue-to-market capitalization ratio.
For investors looking for companies in the staffing industry that have carved out lucrative niches, there are many thanks to ObamaCare and the tepid recovery from The Great Recession.
Robert Half International (NYSE: RHI), established in the legal and accounting fields, is up nearly 44% for the last year of market action. Handling the back office aspects of staffing needs has been very rewarding for the shareholders of Paychex, as it is has soared more than 30% for 2013. Adding to the total return for those owning the stock of Paychex is its dividend with a history of growth.
Despite the claims of The White House, Funk observed that, "Firms are just very reluctant to hire full-time workers. So they are taking on more temporary help, which is what we do." That has also rewarded the shareholders of the publicly traded companies in the staffing sector. Based on the performance of those stocks, ObamaCare should continue to raise the share prices as firms seek to avoid the higher costs of full-time employees.
Additional disclosure: Labor SMART reported record earnings and is undervalued. While I probably will not buy in the next 72 hours, I certainly do expect to in the future.