While governments usually aim for a strong labor market, a very hot labor force can lead to too much risk, forcing stock buying. In fact, US investors may want to consider adjusting their strategies to accommodate future changes in the economy.
On paper, the conditions look just as swell. According to CNN, the US economy added 311,000 jobs in February, Above expectations. So far, so good. However, we are currently dealing with high rates of inflation. Ahead of the jobs report, Federal Reserve Chairman Jerome Powell left the door open for a faster rate hike. With the latest data, the central bank may have no choice but to take a aggressively hawkish stance. If so, the Fed may find it very difficult to engineer a soft landing; That is, controlling inflation without provoking recession. In contrast, higher rates may reduce employment statistics, resulting in unrelated workers. With the stage set for sweeping changes, these are the stocks to buy in the latest jobs report.
Robert Half (RHI)
On a superficial level, mentioning the recruitment agency Robert Half (New York Stock Exchange:RHIAs a stock to buy due to a strong job market, it doesn’t seem to make much sense. After all, with the job market tight, employees can quickly find opportunities elsewhere. So, hiring the services of what actually amounts to a broker seems counterproductive.
RHI shares certainly haven’t responded well lately. In the past week, shares have tumbled more than 5%. And while the RHI rose for the year, it fell nearly 29% the following year. However, with the Fed likely to raise benchmark interest rates to combat inflation, the economy could slip into recession. In fact, the mass layoffs we’ve seen since 2024 have affected sectors other than technology. Also financially, RHI provides a great opportunity to buy shares. For starters, the company has stability on the balance sheet. Moreover, it is a operational force. For example, its three-year revenue growth rate was 8.3%, above nearly 68% of the industry. And net profit margin of 9.09%, surpassing 71% of peers. Therefore, it is worth considering.
Kelly Services (Kelia)
other recruitment agency, Kelly Services (NASDAQ:KeliaIt would seem an odd inclusion of stocks to buy in the strong jobs report. Under normal circumstances, I would totally agree. Why bother dealing with an intermediary entity when you can easily secure a new opportunity in a tight job market? However, my concern centers around sustainability. In other words, I don’t think the job market is going to be that strong going forward.
So yeah, while KELYA looks ugly in terms of chart performance, it could be an understatement. In particular, Kelly Services isn’t just focused on white-collar office jobs. Alternatively, it also facilitates connections for people who are looking for warehouse operations jobs. Again, with mass layoffs on the rise, people may start to despair and take everything they can. In this scenario, Kelly’s services make sense.
Also, the company offers some attractive financial features. Perhaps most importantly, KELYA’s votes are undervalued. Currently, KELYA market prices at a forward multiple of 10.69. As a discount to profits, Kelly’s services Ranked better than 70.19% of the field.
For those who are willing to take a heavy risk of buying their shares, Even work (NASDAQ:UPWK) might be interesting. During the worst of the coronavirus pandemic, many white-collar employers have shifted workers to remote operations. However, a growing number of companies – with Covid-19 fading – are returning their employees to the office. Constant conflict may present expansive opportunities for the gig economy.
To be sure, the freelance economy — or the part that deals with independent (independent) contractors — has always been an attractive concept. But now that the majority of white-collar workers are getting a taste of the temporary lifestyle, they may want to work full-time. If so, Upwork could benefit as a direct facilitator of freelancing opportunities.
In full disclosure, Upwork carries significant risks. Frankly, its balance sheet has questionable statistics. In addition, the organization is very unprofitable despite posting a very strong three-year revenue growth rate of 20.1%. However, Wall Street analysts associate UPWK with The consensus is a strong buy. Also, the average price target stands at $18.22, which indicates an upside potential of approximately 72%.
Mentionsed yo hole (New York Stock Exchange:UHALIt may seem like an incredibly odd idea to buy stocks in the latest jobs report. After all, with a booming job market, there’s supposedly no need to get out of town. Certainly, when we saw the jobs report last Friday, UHAL was down more than 3% in stock value.
However, UHAL has gained nearly 2% since the January open. And in the subsequent year, it rose just over 4%. Essentially, one possible reason for the uptrend may center on projected migration trends. In particular, if the Fed fails to engineer a soft landing, a recession is likely to set in. Under these circumstances, it may be better for workers to move from high-cost urban areas to lower-cost ones. Plus, U-Haul has some Attractive financial metrics. Operationally, the company’s three-year revenue growth rate is 15%, outperforming its peers’ 82.28%. Also, free cash flow (FCF) The growth rate over the same period was 40.3%, above 80.72% for the industry.
From a financial standpoint, UHAL’s market rates are 7.14 times operating cash flow. In contrast, the average value of the sector is 11.17 times, which makes UHAL an undervalued and thus one of the stocks to buy.
Dollar Tree (DLTR)
As mentioned earlier, on the surface, it is mentioned dollar tree (NASDAQ:DLTR) as a stock to buy during a period of strong labor activity seems odd. With people enjoying remunerative jobs, they can easily afford a proper grocery store. Heck, they might even skip cooking for themselves and go out and order food. However, the prospect of higher interest rates suggests that the jobs data may eventually hit a wall. Since the main driver of the Federal Reserve focuses on controlling inflation, the employment sector may take on secondary importance. In other words, some workers may be pawns in the Fed’s high-stakes chess game of inflation-destroying.
If this is the case, people will need access to vital consumer goods at the lowest possible price. Always, this will likely benefit dollar discount stores like Dollar Tree. To be fair, those bidding on DLTR will run risks. Frankly, the company’s balance sheet could be better. However, Dollar Tree’s strong operating stats (especially revenue and net margin) should make DLTR one of the stocks to buy.
Alphabet (GOOG, GOOGL)
on a quick level, the alphabet (NASDAQ:GoogleNasdaq:GoogleSeems like a risky name for stocks to be bought after the strong jobs report. In fairness, it is. For example, over the past 365 days, Class C stock GOOG has shed more than 30% of its share value. GOOG is still reeling from the shocks of 2024, and it desperately needs a positive catalyst to create sustainable momentum.
However, that catalyst may come in the form of a reversal of labor market gains. Let’s say the Fed is being super hawkish with its monetary policy. Thus, higher borrowing costs would hurt demand across the board, leading to mass layoffs. And we are not only talking about the participation of some sectors, but perhaps we are talking about the majority. Where will the worker bees go with the ax? Whether it’s looking for a new opportunity or looking for ways to get an edge (like resume support), people will turn to Google. Over time, the influx of volume should increase digital ad revenue, making GOOG an interesting stock to buy.
As a giant consumer technology company associated with multiple fields, Microsoft (NASDAQ:MSFTOne of the best stocks to buy. And this is almost regardless of context. However, under the scenario that the Fed is ready to kill inflation, MSFT should gain a lot of attention among market participants. With rising borrowing costs leading to job losses, Microsoft may be the perfect investment.
How is that? Simply put, Microsoft owns LinkedIn. And you can almost take it to the bank that when layoffs increase in scope and scale, many will turn to the website. Personally, I’ve seen many of my contacts on LinkedIn detailing their struggles in the job market in hopes of finding new pastures. Some become very successful in their endeavors. Plus, a basic LinkedIn subscription is free. So, you can also take a screenshot. Finally, Microsoft Very attractive financial metrics. From strong revenue to cash flow to profit margins, MSFT is stacking up. To boot, it also benefits from a stable balance sheet. Therefore, it is one of the stocks to buy.
On publication history, Josh Enomoto He did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publication guidelines.