A Cash Rich Play On An Improving Job Market

| About: Korn/Ferry International (KFY)

Monster Worldwide (NYSE:MWW) jumped on Friday on speculation LinkedIn (NYSE:LNKD), PE firm Silver Lake Partners and others had expressed interest in acquiring the firm. As the job market continues to improve, the landscape for firm in the staffing firms should improve. Another firm in the sector that looks interesting due to its valuation and cash rich balance sheet is Korn/Ferry International (NYSE:KFY).

Korn/Ferry International - "Korn/Ferry International, together with its subsidiaries, provides executive recruitment, outsourced recruiting and leadership, and talent consulting and talent acquisition solutions". (Business Description from Yahoo Finance)

6 reasons KFY is a solid bargain at just over $14 a share:

  • It has a robust balance sheet with over $5 a share in net cash on its balance sheet.
  • The stock is cheap at 87% of annual sales and just 12% over book value.
  • Staffing firms should be a primary beneficiary if job growth picks up according to Bloomberg. The stock traded north of $18 earlier in the year when we were getting stronger monthly job numbers.
  • Korn/Ferry has a forward PE of less than 11.5 times 2013's earnings, a discount to its five year average (21.1).
  • KFY has a projected five year PEG of under 1 (.82) and sells for less than 10 times operating cash flow.
  • The median analysts' price target on KFY is $17. S&P has a "Buy" rating and a $20 price target on the stock.

Disclosure: I am long MWW.