The demand for skilled labor remains high as companies look to add quality employees to their workforce to optimize their output. The U.S. economy had added 390,000 jobs in May, higher than analysts had expected.
Supply chain issues have crippled production lines around the world. To address this issue, governments are providing policy assistance for enhancing domestic production, thus driving the demand for labor. According to Future Market Insights, the global talent acquisition and staffing technology and services market is estimated to grow at a 5.7% CAGR through 2028.
According to the Labor Department, there are 5.5 million more job openings than workers available to fill them. This heightened need for labor and employment should increase staffing requirements across industries, benefiting outsourcing and staffing services companies.
According to a new report from Staffing Industry Analysts, global staffing revenue is expected to expand by 9% this year, after an increase of 21% in 2021. Also, the global recruitment process outsourcing market size is projected to reach $25.38 billion by 2028, exhibiting a CAGR of 17%.
Given the industry’s solid growth prospects, it has earned the top rank among the 124 industries in our proprietary rating system. Thus, it could be wise to invest in fundamentally strong outsourcing and staffing services stocks Recruit Holdings Co., Ltd. (RCRUY), GEE Group, Inc. (JOB), and RCM Technologies, Inc. (RCMT). These stocks are currently trading below $20.
Recruit Holdings Co., Ltd. (RCRUY)
Headquartered in Tokyo, Japan, RCRUY offers HR technology and business solutions to help job seekers and employers navigate hiring and recruitment opportunities. The company operates through three segments: HR Technology, Media & Solutions, and Staffing.
On June 15, 2022, RCRUY collaborated with Japan Trucking Association (JTA) to digitalize recruiting operations and enhance employment opportunities in the trucking industry.
In the fiscal fourth quarter (ended March 31, 2022), RCRUY’s total revenue increased 23.9% from the year-ago value to ¥759.70 billion ($5.58 billion). Its operating income grew 132.5% year-over-year to ¥45.30 billion ($333.24 million), while its adjusted EBITDA increased 154.5% year-over-year to ¥78.10 billion ($574.53 million). Also, its adjusted EPS came in at ¥31.98, representing a 371.7% year-over-year improvement.
The consensus revenue estimate of $23.86 billion for fiscal 2023 (ending March 2023) represents a significant increase of 7229.9% year-over-year. Shares of RCRUY have declined 15.5% over the past month to close the last trading session at $5.84.
RCRUY’s POWR Ratings reflect this promising outlook. The company's overall A rating translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It also has an A grade for Stability and Quality and a B grade for Growth and Value. Among the 18 stocks in the A-rated Outsourcing - Staffing Services industry, it is ranked first. Click here to see the POWR Ratings of RCRUY for Momentum and Sentiment.
GEE Group, Inc. (JOB)
JOB offers permanent and temporary professional and industrial staffing and placement services. Operating through two segments: Industrial Staffing Services and Professional Staffing Services, it provides placement of IT, accounting, finance, office, engineering, and medical professionals for direct hire and contract staffing for its clients.
JOB’s net revenues for its fiscal second quarter ended March 31, 2022, increased 14% year-over-year to $39.63 million. Its income from operations increased 84.8% from the prior-year period to $1.18 million, while its adjusted net income stood at $2.24 million, up 228.9%, compared to a loss of $1.74 million in the prior-year period. Also, Its EPS came in at $0.01, representing a 110% improvement from the year-ago period.
For the quarter ending September 30, 2022, JOB’s EPS and revenue are expected to increase 300% and 6% year-over-year to $0.02 and $43.94 million, respectively. The stock has gained 20.9% over the past nine months to close the last trading session at $0.56.
JOB’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
It has an A grade for Value and a B grade for Growth, Sentiment, and Quality. The stock is ranked #3 in the same industry. Click here to see the other ratings of JOB for Momentum and Stability.
RCM Technologies, Inc. (RCMT)
RCMT provides business and technology solutions by deploying engineering, specialty healthcare, and information technology services. It offers solutions to aerospace and defense, energy, health care, life sciences, manufacturing and distribution, technology industries, educational institutions, and the public sector.
During the first quarter (ended April 2, 2022), RCMT’s revenue rose 84% from the year-ago value to $81.96 million. Its operating income increased 557.1% year-over-year to $9.04 million, while its net income grew 547.5% from the same period last year to $6.52 million. The company’s EPS came in at $0.62, representing a 675% increase year-over-year.
Analysts expect RCMT’s EPS and revenues to increase 348.3% and 61.7% year-over-year to $0.53 and $79.13 million in the fiscal second quarter (ended June 2022). RCMT surpassed the consensus EPS estimates in each of the trailing four quarters, which is excellent.
The stock has gained 169.9% year-to-date to close the last trading session at $19.22.
RCMT’s POWR Ratings reflect solid prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
It also has an A grade for Growth and a B grade for Value and Quality. Again, the stock is ranked #5 in the Outsourcing - Staffing Services industry. Click here to see the other ratings of RCMT for Momentum, Stability, and Sentiment.
RCRUY shares were trading at $5.93 per share on Wednesday afternoon, up $0.09 (+1.54%). Year-to-date, RCRUY has declined -51.31%, versus a -18.32% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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