We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Job additions increased significantly in January in yet another signal that President Trump has inherited a particularly healthy economy. In fact, the labor market is nearing full employment, borne out by the decline in wage gains. However, hiring remains strong overall and there is evidence to show that more and more people are returning to join the workforce.
Meanwhile, it is widely expected that the new administration will soon be taking strong measures to boost domestic employment. Currently, retail trade, construction, financial and professional services and the restaurant sector are at the forefront of job gains. This is why investing in stocks from these areas would make for a smart choice.
Highest Job Additions in Four Months
The U.S. economy added 227,000 jobs during the month of January, significantly higher than the 157,000 jobs added during December. This also exceeds the consensus estimate of 174,000 job additions. Additionally, these are the best monthly job gains since September.
For the month of January, the retail, construction, finance and professional services sectors provided the highest job additions. Employment in the retail trade increased by 46,000 with clothing and clothing accessories stores providing 18,000 new jobs.
The construction sector added 36,000 jobs in January with residential building providing 9,000 new jobs. Employment in financial activities, professional and technical services, and food services and drinking places increased by 32,000, 23,000 and 30,000, respectively.
Wage Gains Decline
However, expectations that the economy is moving towards a full employment scenario weighed on workers’ pay, with average hourly wages rising only 0.1% in January, lower than December’s downwardly revised gain of 0.2%. Further, the unemployment rate, meantime, ticked up to 4.8% from 4.7% in January.
The reason for the slight uptick in the unemployment rate is the increase in the number of people seeking work once again. This is borne out by a 0.2 percentage point increase in the labor force participation rate which rose to 62.9%.
Meanwhile, though wage gains have been subdued last month, they have continued to occur. Average hourly earnings increased by 2.5% on a year over year basis. Wage gains are likely to pick up momentum as minimum wage norms begin to take effect. The new administration’s policies are also likely to provide a further fillip to wage increases.
Our Choices
The slack in the labor market may be fast petering out, but some of it remains. Companies are continuing to hire at a rapid pace despite the fact that the economy is near full employment.
Adding stocks from the construction, retail, financial and professional services and the restaurant sector seems to be a prudent option at this point, since they have been at the forefront of job additions. However, picking winning stocks may be difficult.
This is where our VGM score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score.
Tailored Brands, Inc. is a specialty retailer of men's suits and provider of tuxedo rental product primarily in the U.S. and Canada.
Tailored Brands has a VGM Score of A. The company has expected earnings growth of 15.2% for the current year. Its earnings estimate for the current year has improved by 0.7% over the last 60 days. The stock has returned 39.4% over the last three months, outperforming the Zacks Textile - Apparel sector, which has contracted by 13.8% over the same period.
Cross Country Healthcare, Inc. (CCRN - Free Report) is a provider of healthcare staffing services.
Cross Country Healthcare has a VGM Score of A. The company has expected earnings growth of 14.4% for the current year. Its earnings estimate for the current year has improved by 3.6% over the last 30 days. The stock has returned 9% over the last three months, underperforming the Zacks Staffing Firms sector, which has gained 22.9% over the same period. This provides a good opportunity to buy the stock given that there is significant upside potential
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) is an owner and operator of venues in North America that combine dining and entertainment.
Dave & Buster's Entertainment has a VGM Score of A. The company has expected earnings growth of 15.6% for the current year. Its earnings estimate for the current year has improved by 0.6% over the last 30 days. The stock has returned 29.7% over the last three months, outperforming the Zacks Retail - Restaurants sector, which has returned 2.5% over the same period.
PulteGroup Inc. (PHM - Free Report) engages in the homebuilding and financial services businesses primarily in the U.S.
PulteGroup has a VGM Score of B. The company has expected earnings growth of 27.9% for the current year. Its earnings estimate for the current year has improved by 6.7% over the last 30 days. The stock has returned 15% over the last three months, outperforming the Zacks Building Products - Home Builders sector, which has returned 10.4% over the same period.
Fidelity & Guaranty Life is a provider of life insurance and annuity products.
Fidelity & Guaranty Life has a VGM Score of B. The forward price-to-earnings (P/E) ratio for the current financial year (F1) is 9.62, lower than the industry average of 11.66. Its earnings estimate for the current year has improved by 1.2% over the last 60 days. The stock has returned 6.4% over the last three months, underperforming the Zacks Insurance - Life Insurance sector, which has returned 16.3% over the same period. This provides a good opportunity to buy the stock given that there is significant upside potential
Now See Our Private Investment Ideas
While the above ideas are being shared with the public, other trades are hidden from everyone but selected members. Would you like to peek behind the curtain and view them?
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trades >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
5 Stocks to Buy on Big New Jobs Numbers
Job additions increased significantly in January in yet another signal that President Trump has inherited a particularly healthy economy. In fact, the labor market is nearing full employment, borne out by the decline in wage gains. However, hiring remains strong overall and there is evidence to show that more and more people are returning to join the workforce.
Meanwhile, it is widely expected that the new administration will soon be taking strong measures to boost domestic employment. Currently, retail trade, construction, financial and professional services and the restaurant sector are at the forefront of job gains. This is why investing in stocks from these areas would make for a smart choice.
Highest Job Additions in Four Months
The U.S. economy added 227,000 jobs during the month of January, significantly higher than the 157,000 jobs added during December. This also exceeds the consensus estimate of 174,000 job additions. Additionally, these are the best monthly job gains since September.
For the month of January, the retail, construction, finance and professional services sectors provided the highest job additions. Employment in the retail trade increased by 46,000 with clothing and clothing accessories stores providing 18,000 new jobs.
The construction sector added 36,000 jobs in January with residential building providing 9,000 new jobs. Employment in financial activities, professional and technical services, and food services and drinking places increased by 32,000, 23,000 and 30,000, respectively.
Wage Gains Decline
However, expectations that the economy is moving towards a full employment scenario weighed on workers’ pay, with average hourly wages rising only 0.1% in January, lower than December’s downwardly revised gain of 0.2%. Further, the unemployment rate, meantime, ticked up to 4.8% from 4.7% in January.
The reason for the slight uptick in the unemployment rate is the increase in the number of people seeking work once again. This is borne out by a 0.2 percentage point increase in the labor force participation rate which rose to 62.9%.
Meanwhile, though wage gains have been subdued last month, they have continued to occur. Average hourly earnings increased by 2.5% on a year over year basis. Wage gains are likely to pick up momentum as minimum wage norms begin to take effect. The new administration’s policies are also likely to provide a further fillip to wage increases.
Our Choices
The slack in the labor market may be fast petering out, but some of it remains. Companies are continuing to hire at a rapid pace despite the fact that the economy is near full employment.
Adding stocks from the construction, retail, financial and professional services and the restaurant sector seems to be a prudent option at this point, since they have been at the forefront of job additions. However, picking winning stocks may be difficult.
This is where our VGM score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score.
We have narrowed down our search to the following stocks, each of which has a Zacks Rank #1 (Strong Buy) and a good VGM score. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Tailored Brands, Inc. is a specialty retailer of men's suits and provider of tuxedo rental product primarily in the U.S. and Canada.
Tailored Brands has a VGM Score of A. The company has expected earnings growth of 15.2% for the current year. Its earnings estimate for the current year has improved by 0.7% over the last 60 days. The stock has returned 39.4% over the last three months, outperforming the Zacks Textile - Apparel sector, which has contracted by 13.8% over the same period.
Cross Country Healthcare, Inc. (CCRN - Free Report) is a provider of healthcare staffing services.
Cross Country Healthcare has a VGM Score of A. The company has expected earnings growth of 14.4% for the current year. Its earnings estimate for the current year has improved by 3.6% over the last 30 days. The stock has returned 9% over the last three months, underperforming the Zacks Staffing Firms sector, which has gained 22.9% over the same period. This provides a good opportunity to buy the stock given that there is significant upside potential
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) is an owner and operator of venues in North America that combine dining and entertainment.
Dave & Buster's Entertainment has a VGM Score of A. The company has expected earnings growth of 15.6% for the current year. Its earnings estimate for the current year has improved by 0.6% over the last 30 days. The stock has returned 29.7% over the last three months, outperforming the Zacks Retail - Restaurants sector, which has returned 2.5% over the same period.
PulteGroup Inc. (PHM - Free Report) engages in the homebuilding and financial services businesses primarily in the U.S.
PulteGroup has a VGM Score of B. The company has expected earnings growth of 27.9% for the current year. Its earnings estimate for the current year has improved by 6.7% over the last 30 days. The stock has returned 15% over the last three months, outperforming the Zacks Building Products - Home Builders sector, which has returned 10.4% over the same period.
Fidelity & Guaranty Life is a provider of life insurance and annuity products.
Fidelity & Guaranty Life has a VGM Score of B. The forward price-to-earnings (P/E) ratio for the current financial year (F1) is 9.62, lower than the industry average of 11.66. Its earnings estimate for the current year has improved by 1.2% over the last 60 days. The stock has returned 6.4% over the last three months, underperforming the Zacks Insurance - Life Insurance sector, which has returned 16.3% over the same period. This provides a good opportunity to buy the stock given that there is significant upside potential
Now See Our Private Investment Ideas
While the above ideas are being shared with the public, other trades are hidden from everyone but selected members. Would you like to peek behind the curtain and view them?
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trades >>