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Jonathan Yates
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Jonathan Yates is the founder of EarnedMediaUnlimited. He has had thousands of articles appear under his byline in websites and periodicals such Seeking Alpha, The Washington Post, AOL Daily Finance, Foreign Policy, and The Motley Fool, among many others. The views expressed are his own. In his... More
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  • The American Labor Market Is Changing And So Should Your Portfolio 0 comments
    Sep 2, 2013 4:18 PM | about stocks: PAYX, JCP, LTNC, MAN, TBI

    Many times in life you get your best investing tips from the unexpected.

    Legendary investor Peter Lynch said this resulted from the everyday items you saw selling well at the mall. According to Lynch, a billionaire investor who was one of the best of all time, that results from the shopper at the mall knowing what was selling better than someone on Wall Street. As hedge fund manager Bill Ackerman just sold off his JC Penney (NYSE: JCP) position at a $425 million loss, that certainly makes sense. From here, my attention turned to the demand labor sector and such companies as Paychex (NASDAQ: PAYX), ManpowerGroup (NYSE: MAN), Labor SMART (OTCBB: LTNC), and True Blue Inc. (NYSE: TBI).

    I get a newsletter from a head hunter in the Los Angeles area.

    He is a great guy, and does his job well: business is booming, and it could not happen to a nicer guy. I also read a recent article in The Wall Street Journal about how law firms are having massive layoffs and using more temps to do legal work. That too could not be happening to a nice group of guys (NOT!) It seems that clients have rebelled about massive legal fees so firms are using contract lawyers, who can perform many of the same tasks as well as full-time expensive attorneys (as a lawyer, I know this to be true from my law firm experience).

    That is when the proverbial light bulb went off.

    I know from personal experience that Robert Half International (NYSE: RHI) has a lucrative niche in the legal sector. From reading, I came upon Labor SMART, which has been rapidly expanding in the demand labor sector. This is a $29 billion industry that continues to grow due to changes in the America economy as companies prefer to hire temporary workers as a result of the higher costs of full-time employee. Since 2011, revenues have grown for Labor SMART from only $0.16 million to a projected $18 million this year. Branch expansion for the company has soared from 2 in 2011 to 14 so far in 2013, while they continue to implement their goal of eventually having a nationwide footprint by growing into 9 states in less than two years. Labor SMART also just initiated its first acquisition of Qwik Staffing Solutions, which now allows it access to the profitable Florida market.

    Labor SMART has a largely diverse client base now totaling over 1,000, ranging in size from small businesses to Fortune 100 companies. The company boasts seasoned executives and proven management in the temporary labor industry. They also recently announced the opening of a new Corporate Accounts Division, which will make it even more responsive to the need of larger clients which should draw in more revenue stream.

    With today being Labor Day, there were many other articles about the changing nature of the workforce. For investors, this naturally results in opportunities for disruptive profits, as always happens. Paychex, ManpowerGroup, Labor SMART, True Blue Inc. and others are growing, and there should be more gains ahead for shareholders of firms in the booming demand labor industry.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: PAYX, JCP, LTNC, MAN, TBI
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