Job growth in October exceeded economists’ expectations, with industries nationwide witnessing widespread job addition as more candidates entered the labor pool. To top it, unemployment rate fell to a 48-year low and wages rose at the fastest pace in more than nine years.
Given such positives, it would be prudent to look into stocks that can make the most of this impressive employment data.
U.S. Labor Market is in Good Shape
Non-farm payroll in the country rose much more than expected in October, a report released by Labor Department cited last week. The economy added 250,000 new jobs in October, beating analysts’ estimate of 190,000 new job additions.
In fact, the economy added an average of 213,000 jobs a month since January this year for the first 10 months, much higher than the 182,000 jobs added during the same period last year.
Hiring in October was broad-based, with all major industries adding jobs and none responsible for layoffs. Among the major industries, jobs were added across leisure and hospitality, healthcare, professional and business services, manufacturing, construction, transportation and warehousing and mining.
Leisure and hospitality industry added 42000 jobs, followed by the addition of 36000 new jobs in healthcare, 35000 in professional and business services, 32000 in manufacturing, 30,000 in construction, 25000 in transportation and warehousing and 5000 in mining industry. Other major industries such as wholesale trade, retail trade, financial services too added new jobs.
The unemployment rate, in the meantime, had gone down to a 48-year low of 3.7% in October. U6, the real number of unemployed persons in the U.S., edged down to 7.4% in October from 7.5% in September, indicating the overall optimistic nature of the U.S. labor market.
Wages Grow Fastest in 9 Years, Labor Force Participation Rate Inches Up
Wages in the country grew at an annualized rate of 3.1% last month, climbing from 2.8% the month before. Average hourly earnings for workers in private sectors hit $27.30 in October, rising 83 cents from the year-ago period. This annual increase is the strongest since April 2009.
The country’s labor force participation rate also inched up to 62.9% in October from 62.7% in September, indicating that more working age persons were seeking jobs.
Which Stocks to Benefit From This Blockbuster Jobs Report?
The impressive jobs report in October could very well boost a few industries including staffing and leisure and hospitality.
Job additions and increase in labor force participation rate points toward healthy growth in staffing and recruitment firms. After all, more the number of persons decides to join the labor force, more staffing firms are likely to benefit. Also, improvement in wage growth along with the highest number of hiring in the leisure and hospitality industry, gives us all the more reasons to invest in this space. Thanks to such a hiring spree, the leisure and hospitality industry is surely in an expansion mode and their businesses are churning out huge profits.
4 Solid Choices
We have, thus, hand-picked four solid stocks from the staffing, leisure and hospitality industries that carry a Zacks Rank #1 (Strong Buy) or #2 (Buy).
Marcus Corporation (MCS - Free Report) is engaged in lodging and entertainment industries. It operates through movie theatres, hotels and resorts. The company carries a Zacks Rank #1 and its expected earnings growth rate for the current year is 22% compared with the Leisure and Recreation Services industry’s projected rise of 5.3%. Marcus Corporation’s Zacks Consensus Estimate for 2018 has witnessed 6.8% growth over the last 60 days.
SeaWorld Entertainment Inc. (SEAS - Free Report) is a theme park and entertainment company that operates mainly in the United States. The company carries a Zacks Rank #2 and its Zacks Consensus Estimate for the current year has witnessed 11.6% gain over the past two months. SeaWorld Entertainment’s expected earnings growth rate for 2018 is 128.6% against the Leisure and Recreation Services industry’s projected rally of 5.3%.
Heidrick & Struggles International, Inc. (HSII - Free Report) is a staffing firm that caters to top organizations worldwide. The company carries a Zacks Rank #1 and its expected earnings growth rate for 2018 is 105.5% compared with the Staffing Firms industry’s projected rise of 22.3%. Heidrick & Struggles International’s Zacks Consensus Estimate for the current year has witnessed 11.4% growth over the last 60 days.
You can see the complete list of today’s Zacks #1 Rank stocks here.
BG Staffing Inc. (BGSF - Free Report) provides temporary staffing services across various industries in the United States. The company carries a Zacks Rank #2 and its Zacks Consensus Estimate for 2018 has witnessed 1.2% gain over the past two months. BG Staffing’s expected earnings growth rate for the current year is 63.4% against the Staffing Firms industry’s projected rally of 22.3%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>