7 Fortune 500 Companies That Are Hiring: Time to Jump in and Buy?

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Includes: AMZN, BAC, DELL-OLD, INTC, MSFT, T, WMT
by: Investment Underground

By Lucas Scholhamer

A recent CNNmoney article took a look at some Fortune 500 companies that are currently attempting to add more employees. Given the country’s stagnating job growth — only 18,000 jobs were added in June, less than one-fifth of what economists had estimated — we dug deeper to find out what these businesses have to gain by hiring in such a slow environment.

Wal-Mart Stores, Inc. (NYSE:WMT): The number one company on the Fortune 500 list currently has at least 1,000 openings for jobs at all levels throughout the corporation, from store workers to global sourcing and financial strategists. This comes as part of an initiative announced last year to add 500,000 jobs globally by 2015.

Wal-Mart shares currently trade at $53.51, near the middle of a 52-week range between $49 and $58, with a P/E ratio of 12.5 and a dividend yield of 2.72%. The monster retailer has struggled with increasing share values over the last decade or so, and today’s prices are back to the same levels as 1999. However, Wal-Mart has taken several steps to break out of its rut.

First, the company announced the renewal of a $15 billion share buyback plan in an attempt to boost stock prices. Additionally, the current job openings represent just a drop in the bucket of Wal-Mart’s long-term expansion plan, with most growth being seen abroad. Adding half a million workers by 2015 would increase the size of its workforce by nearly 25%. Furthermore, WMT recently announced a $2.4 billion deal for a controlling stake in South African-based Massmart Holdings Limited, a large retailer operating hundreds of stores in 13 sub-Saharan countries. Finally, Wal-Mart will be experimenting with a new chain of 15 smaller “Express” stores in several states this year, and the poor employment environment should enable the company to pick up workers at a discount.

However, I would recommend buying WMT stock only if one has an exceptionally long-term time horizon. With a company this size, nothing happens quickly. The company’s stock is not very responsive to the market, as it loses customers to cheaper competitors such as Family Dollar (NYSE:FDO) in hard economic times and to more expensive retailers including Target (NYSE:TGT) and Costco (NASDAQ:COST) when the economy thrives. Still, fair value estimates for WMT shares average just north of $60.00. And as with any blue-chip company, slow and steady growth with ever-increasing dividends makes for an attractive and relatively safe buy, especially given WMT’s expansion initiatives. Still, for those with less patience, Target and Family Dollar provide a more leveraged alternative.

Amazon.com Inc. (NASDAQ:AMZN): This major online shopping website currently has over 2,000 open positions throughout all levels of the company. The company’s stock has been roaring since late 2008, when its price was a mere $38 per share. Three years later, it is sitting at $225.45, including a YTD gain of over 25%. Shares carry a trailing P/E ratio of 93.

Amazon has recently been focusing on growing through its Kindle e-readers and cloud-computing capabilities. While competition from the iPad provided some reason to worry, Amazon grabbed the bull by its horns, creating an application for Apple’s (NASDAQ:AAPL) tablet. Additionally, the company has announced a number of cloud-related features for Android gadgets, Macs, and PCs that allow the user to purchase, access, or stream music and movies from anywhere with internet accessibility. Finally, AMZN has focused on increasing its global presence, introducing a number of services in German and Japanese.

However, the expansion of cloud-related services has cut into Amazon’s profitability in the short run, as it has been spending significant amounts of money on adding warehouses and data centers. Additionally, Amazon’s high P/E ratio tops both tech and retail competitors alike. Barnes & Noble (NYSE:BKS) has a forward P/E of just over 40, while Apple’s trailing P/E sits around 15. Finally, rising shipping costs have also hurt the company in the recent months.

However, AMZN just announced the results of a strong second quarter that saw sales increase 51% year-over-year, fueled by strong sales of a $139, 3G version of the Kindle. Although the capital investments being made now have weighed down the company’s numbers for the last several months (operating income is expected to fall between 37% and 93% YOY this quarter), I think that they will pay off as the company continues to grow its presence overseas and in the cloud. Amazon executives are optimistic too, projecting net sales to increase between 37% and 63% YOY for the quarter. Furthermore, Amazon should benefit from hiring at this point in time, as competition for limited jobs will bring in more qualified employees at a low cost, improving operating margins and keeping the company at the cutting edge of online retail.

AT&T Inc. (NYSE:T): The telecommunications giant, number 12 on the Forbes 500 list, announced that it currently has nearly 2,750 job openings available. Most of these will be related to retail, U-Verse call centers and networks, and other specialized tech growth areas. AT&T stock is valued at $30.12 per share, around which it has hovered since gaining $3 back in March.

Most talk of AT&T concerns its potential $39B acquisition of T-Mobile (OTCQX:DTEGY). Should it be approved by the FCC, AT&T will eclipse rival Verizon Wireless (NYSE:VZ) in size, and together these 2 companies will dominate the U.S. cellular phone scene, claiming well over 60% of the marketshare. And while AT&T is currently hiring, a successful merger would likely result in substantial layoffs as the company tries to pick up synergies that could potentially offset the acquisition costs (hopefully more effectively than in the wake of its 2006 BellSouth acquisition).

Some of these benefits include more smartphone penetration and data average return per user, along with saving money from network overlap. If the merger fails (which is appearing more and more unlikely), look for stock prices to dip. However, even without T-Mobile, AT&T has had recent success. In its Q2 earnings report, the company announced a 2.2% year-over-year increase in revenues to $31.5 billion and record second quarter smartphone sales that grew by over 100%.

Additionally, AT&T stock boasts an impressive dividend yield of 5.68% and a P/E ratio of just 9. Price target estimates for the stock are averaging around $35 per share, a potential 16% upside. I like this company as a long-term investment, and while I do believe the T-Mobile merger will go through, a failure could bring about a valuable buying opportunity.

Bank of America Corporation (NYSE:BAC): At number nine on the Forbes 500 list is Bank of America. Already one of the world’s largest financial institutions (serving a broad range of clients from individuals to small businesses to governments and corporations in 40 countries), BAC currently has 4,720 openings for jobs in consumer banking, commercial banking, technology and operations, investment, and finance. The company’s stock has been on a bearish trend since January, falling nearly 4$ to today’s price of $9.87 per share, with a forward P/E ratio of 5.9.

In its latest quarterly report, Bank of America announced a loss of $0.90 per share (or a total net loss of $8.8 billion, compared to last year’s $3.1 billion net gain for Q2). Any gains from the stronger-performing areas, such as the Global Wealth and Investment Management and Global Banking and Markets divisions or the solid performance of underlying businesses, continue to be overpowered by toxic mortgage assets. BAC reached an $8.5 billion settlement with investors who lost significant amounts of money from bad mortgage-backed securities.

Despite the 27% YTD decrease in stock price, analysts still seem to maintain a degree of optimism, with price target estimates averaging between $14 and $17. I believe the bearish trend will continue as the resolution of the subprime mortgage crisis continues to drag down Bank of America’s numbers. However, once this issue is cleared up, the bank stands to profit from a long-term improvement in the housing market and, fingers crossed, a slowly recovering national economy. Still, I would not recommend going long at this point in time, but the current downtrend could pave the way to a future entry point for investors with long-term goals.

Intel Corp (NASDAQ:INTC): The world’s leading chipmaker is looking to hire over 3,000 workers for positions in software engineering, platform engineering, technology engineering, and manufacturing. The company’s stock is currently valued at $22.89, near the top of its 52-week range with a P/E ratio of 10.7. With a market cap of $121.4 billion, Intel is exponentially larger than most competitors, and it offers a solid dividend yield of 3.15%.

Intel is looking to remain on top during the evolution of increasingly competitive and versatile operating systems. Android and other emerging operating systems from Apple and Google (NASDAQ:GOOG) are capable of functioning on multiple processors, meaning that Intel no longer has the near monopolistic luxury of being the sole beneficiary of business from OS designers, especially Microsoft (NASDAQ:MSFT). Companies like Advanced Micro Devices (NASDAQ:AMD) have introduced competition to the mix—and with competition comes lower prices, lower margins, and a subsequent decrease in share value for INTC.

However, Intel does have some competitive advantages that should help it maintain its industry-leader status. First, given the fact that Android, Mac OS X, and other increasingly prevalent operating systems can function on Intel processors, Intel no longer faces the constraints of designing processors almost exclusively to carry out Microsoft Windows-based functions. Furthermore, Intel’s massive size means that it can continue to sink substantial funds into R&D to keep competitors on their toes and effectively set an entirely new direction for the industry. An Intel recruiter reported that the company is looking for “relentless problem solvers…who can challenge the status quo, and thrive in a sometimes ambiguous environment,” which leads me to believe the company has an understanding of the challenges ahead and is dedicated to coming out on top.

Microsoft Corporation (MSFT): Sitting at number 38 on the Forbes 500 list, Microsoft is looking to add 6000 jobs in everything from engineering to marketing and sales and customer support. Shares rose to $28.08 at the time of writing, continuing a run up from $23.70 that started in mid-June. MSFT stock carries a P/E ratio of 11.1 and a dividend yield of 2.29%.

Microsoft is also feeling the pressure of user-experience-oriented operating system revolution. With the aesthetically pleasing, intuitive interfaces of operating systems like Mac OS X and Android, Microsoft Windows is still fighting its own reputation—the blue error screen, the “Three-Finger Salute” (CTRL + ALT + Delete), and so on. Although the Windows 7 overhaul did a lot to address most of these issues, the company is still working to rid itself of such a stigma. However, there is one part of Microsoft that competitors have not been able to touch: Microsoft Office. It is still the industry standard and has been a big moneymaker for the company for years.

The numbers look good too. In its most recent quarterly earnings report, Microsoft announced record fourth quarter revenue of $17.37 billion, a year-over-year increase of 8%. Its diluted earnings per share of $0.69 were a 35% improvement over last year. The company’s Xbox 360 was the top-selling game system over the last 12 months, and Microsoft’s search engine, Bing, increased its search share 340 basis points to 14.4% on the quarter. Finally, MSFT is looking to capitalize on the cloud movement with its Windows Azure web-based app-development program. Still, the most crucial factor for determining Microsoft’s success will be its ability to continue improving the Windows OS. I like Microsoft as a company, and I would recommend buying stock.

Dell Inc. (DELL-OLD): The computer giant is looking to hire nearly 4,900 new employees for positions in web development, IT information development, networking, and business development specialists, among others. Shares dropped to $17.11 on the day, the latest movement in an unsteady bullish trend this year. Dell stock carries a P/E of 10.3.

Dell serves as the link between Intel and Microsoft. And while it doesn’t actually own a significant amount of technology, the company’s strength lies in its ability to remain in touch with users and deliver customized products. Although it relies on the IP of Intel and Microsoft, Dell has recently been buying innovation through acquisitions of companies including Force10 Networks and Compellent Technologies, Inc. among many others.

Furthermore, Dell is growing its presence in the lucrative server market, which will continue to expand dramatically with the propagation of cloud computing. According to the company’s review of FY 2011, Dell’s record-breaking $16.5 billion in revenues were driven largely by the success of its enterprise solutions and services businesses, which grew by 27% on the year.

Additionally, its EPS of $0.55 on the quarter beat consensus estimates by over 10 cents, stretching its streak of outperforming forecasts to 6 consecutive quarters. Dell’s determination to expand its IP and solutions portfolio through acquisitions and hirings is a good sign for the company and investors alike, and with price target estimates averaging around $20, Dell stock is certainly enticing. I believe Dell is a good buy, and with support showing around $17.00, this could be a valuable opportunity to pick up shares.

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