Manpower (MAN) is expected to continue recovering after it saw a downturn that can be attributed to some of its fundamentals move in the wrong direction due to the company’s European exposure, and the stock saw a significant rally toward the end of 2012, says Jeffrey M. Silber, Managing Director at BMO Capital Markets Corp.
“The stock has actually rallied towards year end. It’s up about 12% year to date [for 2012], and it’s trading at about 14 times next year’s earnings — again, the group is at 16 — so as long as you think Europe will start recovering within the next 12 months or so, I think this stock can continue to work,” Silber said.
MAN gets about 60% of its business from Europe, mostly from lower-skilled staffing, and a European recovery is expected to significantly impact the company’s equity. Silber says companies are still unsure about the European performance for 2013, but he hopes comparisons will get better this year.
“You are seeing in some of the other areas growth slow a little bit. Temporary staffing usually rebounds after an economic downturn pretty dramatically, and then as the economic cycle matures, you see growth slow a little bit. So I think you will still see these companies saying that they are looking for growth, but because of the tough comps and the law of large numbers, growth will slow a little bit,” Silber said.
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