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5 Business Services Stocks to Buy as Job Gains Soar
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In August, job additions exceeded expectations, indicating that economic expansion retained steam toward the end of summer. Though the unemployment rate remained unchanged at 3.9%, the big news from this Labor Department report was the spike in wage gains. This metric soared to its highest level since the end of the Great Recession.
It wasn’t that there weren’t any disappointments on offer. Job gains for June and July were revised significantly downward. But August’s figure was in line with average monthly gains over the past year. Once again, professional and business services led job gains. This is why it makes sense to add stocks from this domain to your portfolio at this time.
Wage Gains Surge, Unemployment Remains Flat
Though job additions for August came in above expectations, the unemployment rate remained flat at 3.9%. That is merely 0.2% higher than the lowest level recorded in 50 years. The U6 unemployment rate that includes people forced into part-time work and people only sporadically looking for jobs, also dropped from 7.5% to 7.4%.
Meanwhile, the employment-to-population rate and the labor force participation rate each declined by 0.2% to 60.3% and 62.7%, respectively. However, average hourly earnings increased by 10 cents to $27.16. Consequently, the metric has increased by 77 cents or 2.9% over the past year. This is the fastest pace witnessed since June 2009.
Professional and Business Services Lead Gains
The economy added 201,000 jobs in August, exceeding the consensus estimate of 193,000. Notably, monthly job additions have averaged 196,000 over the past one year. However, job additions for June and July were revised downward by a combined 50,000.While, June’s job additions were lowered from 248,000 to 208,000, July’s gains were cut to 147,000 from 157,000.
At the forefront of job gains were healthcare, wholesale trade, transportation and warehousing, and construction, which added 33,000, 22,000, 20,000 and 23,000 jobs, respectively. However, the largest contributor to job additions was professional and business services with 53,000 new jobs. The sector has added 519,000 jobs in the last 12 months.
Our Choices
Despite the downward revisions for June and July’s job gains, the overall labor market picture remains solid. The unemployment rate continues to remain flat at record-low levels while labor force participation has declined only marginally. Further, job gains for August remained above the average level of monthly job additions for the past year.
As has been the case for several months now, professional and business services provided the highest number of job additions. Adding stocks from this sector looks like a smart choice at this point. 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.
Heidrick & Struggles International, Inc. (HSII - Free Report) serves the executive talent and leadership needs of the world's top organizations as the premier provider of leadership consulting, culture shaping and senior-level executive search services.
Heidrick & Struggles has a VGM Score of A. The company has expected earnings growth of 84.4% for the current year. The Zacks Consensus Estimate for the current year has improved by 11% over the last 60 days.
Conduent Incorporated (CNDT - Free Report) is a business process services company. It engages in providing business and government services to citizens, patients, customers and employees.
Conduent has a VGM Score of A. The company’s projected growth rate for the current year is 35.6%. The Zacks Consensus Estimate for the current year has improved by 13% over the last 30 days.
CRA International Inc. (CRAI - Free Report) provides legal, regulatory, business consulting and other expert services through its specialized consultants across the globe.
CRA International has a VGM Score of B. The company’s expected earnings growth for the current year is 21.5%. The Zacks Consensus Estimate for the current year has improved by 4.6% over the last 60 days.
Clean Harbors, Inc. (CLH - Free Report) is a leading provider of environmental, energy and industrial services in North America.
Clean Harbors has a VGM Score of A. The company’s expected earnings growth for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved by 37.5% over the last 60 days.
General Finance Corporation provides mobile storage, liquid containment and modular space solutions.
General Finance has a VGM Score of B. The company’s projected growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved by 13% over the last 30 days.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
5 Business Services Stocks to Buy as Job Gains Soar
In August, job additions exceeded expectations, indicating that economic expansion retained steam toward the end of summer. Though the unemployment rate remained unchanged at 3.9%, the big news from this Labor Department report was the spike in wage gains. This metric soared to its highest level since the end of the Great Recession.
It wasn’t that there weren’t any disappointments on offer. Job gains for June and July were revised significantly downward. But August’s figure was in line with average monthly gains over the past year. Once again, professional and business services led job gains. This is why it makes sense to add stocks from this domain to your portfolio at this time.
Wage Gains Surge, Unemployment Remains Flat
Though job additions for August came in above expectations, the unemployment rate remained flat at 3.9%. That is merely 0.2% higher than the lowest level recorded in 50 years. The U6 unemployment rate that includes people forced into part-time work and people only sporadically looking for jobs, also dropped from 7.5% to 7.4%.
Meanwhile, the employment-to-population rate and the labor force participation rate each declined by 0.2% to 60.3% and 62.7%, respectively. However, average hourly earnings increased by 10 cents to $27.16. Consequently, the metric has increased by 77 cents or 2.9% over the past year. This is the fastest pace witnessed since June 2009.
Professional and Business Services Lead Gains
The economy added 201,000 jobs in August, exceeding the consensus estimate of 193,000. Notably, monthly job additions have averaged 196,000 over the past one year. However, job additions for June and July were revised downward by a combined 50,000.While, June’s job additions were lowered from 248,000 to 208,000, July’s gains were cut to 147,000 from 157,000.
At the forefront of job gains were healthcare, wholesale trade, transportation and warehousing, and construction, which added 33,000, 22,000, 20,000 and 23,000 jobs, respectively. However, the largest contributor to job additions was professional and business services with 53,000 new jobs. The sector has added 519,000 jobs in the last 12 months.
Our Choices
Despite the downward revisions for June and July’s job gains, the overall labor market picture remains solid. The unemployment rate continues to remain flat at record-low levels while labor force participation has declined only marginally. Further, job gains for August remained above the average level of monthly job additions for the past year.
As has been the case for several months now, professional and business services provided the highest number of job additions. Adding stocks from this sector looks like a smart choice at this point. 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 stocks here.
Heidrick & Struggles International, Inc. (HSII - Free Report) serves the executive talent and leadership needs of the world's top organizations as the premier provider of leadership consulting, culture shaping and senior-level executive search services.
Heidrick & Struggles has a VGM Score of A. The company has expected earnings growth of 84.4% for the current year. The Zacks Consensus Estimate for the current year has improved by 11% over the last 60 days.
Conduent Incorporated (CNDT - Free Report) is a business process services company. It engages in providing business and government services to citizens, patients, customers and employees.
Conduent has a VGM Score of A. The company’s projected growth rate for the current year is 35.6%. The Zacks Consensus Estimate for the current year has improved by 13% over the last 30 days.
CRA International Inc. (CRAI - Free Report) provides legal, regulatory, business consulting and other expert services through its specialized consultants across the globe.
CRA International has a VGM Score of B. The company’s expected earnings growth for the current year is 21.5%. The Zacks Consensus Estimate for the current year has improved by 4.6% over the last 60 days.
Clean Harbors, Inc. (CLH - Free Report) is a leading provider of environmental, energy and industrial services in North America.
Clean Harbors has a VGM Score of A. The company’s expected earnings growth for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved by 37.5% over the last 60 days.
General Finance Corporation provides mobile storage, liquid containment and modular space solutions.
General Finance has a VGM Score of B. The company’s projected growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved by 13% over the last 30 days.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>