Bearish Outlook for US Economy is Bullish for Staffing Industry Stocks like Paychex and Labor SMART

by George Lunga
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Submitted by George Lunga as part of our contributors program.

By extending the one trillion in annual securities purchases by the Federal Reserve, Chairman Ben Bernanke told all that the American economy was still weak. That is why the US Dollar (NYSE: USD) fell in trading. It is also why the outlook for companies in the temporary workforce industry such as Paychex (NASDAQ: PAYX), Robert Half (NYSE: RHI), TrueBlue (NYSE: TBI) and Labor SMART (OTCBB: LTNC) is rising.

The staffing industry in the United States is a $100 bill segment of the economy.

Of that, the demand labor segment is nearly $30 billion, and growing. That has been shown by the rapid growth of companies such as Labor SMART. Based in Georgia, August revenues for Labor SMART were 175% above those for last year.

In addition to the soaring revenues, Labor SMART added over 100 more clients last month. The company is also expanding both internally and externally. Internally, Labor SMART recently added a Corporate Accounts Division. To tap into the lucrative Florida market, Labor SMART acquired QWIK Staffing Solutions earlier this year.

For income investors, there is Paychex.

At present, Paychex has a dividend yield of more than 3.4%. The average for a member of the Standard & Poor’s 500 Index is around 2%. Paychex also has the cash flow to increaese its dividend.

More and more workers in the United States are now employed on a part-time basis. That increases the need for the products and services of Labor SMART, Paychex, Robert Half, and others in the sector, such as TrueBlue. There is every reason to believe that the demand from companies will not only contine, but increase into the future.

A robust industry, there is something for all investors in the staffing sector. The growth of Labor SMART should appeal to those looking for a small cap with tremendous potential upside. For those wanting dividend income, there is Paychex. Robert Half offers its lucrative niche in the legal and accounting professions. Up more than 44% for the last year, that is paying off for the shareholders of Robert Half.

Just because the American economy is growing slowly does not mean that stock gains have to linger, too. The performance of the Dow Jones Industrial Average and the Standard & Poor’s 500 Index this year is testament to that. For the future, stocks like Labor SMART, Paychex, and Robert Half in the staffing industry should also reward shareholders.

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