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Investment Ideas

Governmental red tape causes delays in almost every project originated at the federal level.  Back in 2015 President Obama signed into law the $305 billion Fixing America’s Surface Transportation Act (ironically dubbed the FAST Act), and the funding is just getting to the States in 2017.  These projects include $205 billion for U.S. highways, and $48 billion on transit projects.  The funding is set to expire in 2020, just about the time now President Trumps expected U.S. Infrastructure plan will be getting off the ground (given the current speed of congress).  

Fast forward to 2017, states are now allocating these funds, and accepting bids for the improvement projects.  These bidding firms will need to hire new labor, engineers, and a flurry of other manufacturing job openings.  This is where our top staffing firms come into the equation.  

Staffing agencies have access to a myriad of labor participants ranging from executives to day laborers.  We have looked into many of these firms to see which ones have the most exposure to the jobs needed to start and complete these new transportation and infrastructure job openings and below are our top picks to fill these job openings.  

Our Picks for the Staffing Sector

TrueBlue Inc. (TBI - Free Report) , a Zacks Rank of #2 (Buy), is the parent company of Labor Ready, Spartan Staffing, CLP Resources, and PlaneTechs. TrueBlue's brands provide general labor, light industrial and skilled trades services to small to mid-sized businesses in the construction, warehousing, hospitality, landscaping, transportation, light manufacturing, retail, wholesale, facilities, sanitation, and aviation industries.

TrueBlue reports earnings on May 1 after the market closes.  The company has posted an average positive earnings surprise of +5.4% over the past four quarters.  As you can see in the graph below, TBI has been outperforming the S&P 500 since the election in November.

Kelly Services Inc. (KELYA - Free Report) , a Zacks Rank #3 (Hold) provides temporary office clerical, marketing, professional, technical, light industrial, home care services, management services and other business services to a diversified group of customers through offices located in major cities of the United States, Australia, Canada, Denmark, France, Ireland, Italy, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Russia, Spain, Switzerland and United Kingdom. Kelly Temporary Services provides office clerical, marketing, professional, technical, semi-skilled light industrial and management services.

Kelly Services reports earnings on May 10.  The company has posted positive earnings surprises in the past two quarters of +5.8%, and +2.3%.  As you can see in the graph below, KELYA is outperforming the S&P 500 since the election as well.

ManpowerGroup (MAN - Free Report) , holds a Zacks Rank #3 (Hold), and is a leading non-governmental employment services organization. The company's largest operations, based on revenues, are located in the United States, France and the United Kingdom. The company provides a variety of staffing and workforce management services and solutions, including temporary staffing services, contract services and training and testing of temporary and permanent workers. The company provides employment services to a wide variety of customers.

ManpowerGroup reports earnings on April 21 before the market opens.  MAN has beaten the Zacks consensus earnings estimates for the past 6 consecutive quarters with a four quarter average positive earnings surprise of +6.3%.  Also, like our other two staffing companies, MAN has outpaced the S&P 500 since the election as you can see in the graph below.

Bottom Line

The unemployment rate has hit a 10-year low, 4.5%, and the economy is at almost full employment, which has increased the need for staffing services to fill these new infrastructure and transportation job openings.  Further, this is not just a summer, or seasonal issue, these projects will take years to complete.  This would indicate that the next few years might be a golden age for staffing service companies.

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