Demand is strong for higher-end, white-collar, U.S.-focused business professionals within the employer services and staffing sectors due to high profit margins and discretionary budgets at most corporations, as well as the limited supply of workers with the right skill sets, says Timothy McHugh, CFA, Partner and Analyst at William Blair & Company, L.L.C.
“If you look, even in the most recent BLS data, the majority of the employment growth in the last several months has come from white-collar professionals and the temporary staffing industry,” he said. “While those two areas account for a relatively small percentage of a labor market, they are accounting for the bulk of the employment growth right now.”
McHugh likes Robert Half International Inc. (RHI), a high-quality company on the staffing side. He says the company continues to grow faster than the overall industry and perform well at the top line. McHugh also says that RHI’s focus on the U.S. makes him more confident that the company’s growth can be sustained over time.
“Given the strength in the company’s gross margin, we think the company can recover back to the company’s prior peak margin during the next few years, which should provide for a significant earnings growth. That’s why we like Robert Half,” McHugh said.