3 Reasons Family Offices Should Invest in the Staffing Sector
Family offices are entities that invest and perform other financial duties for wealthy families. The ultimate objective for every family office is profitable long-term investing, the same as it should be for every individual.
Stocks in the staffing sector provide growth,value, and income opportunities that should meet the needs of every family office and every individual.
The $100 billion staffing industry, meanwhile, is booming in the United States.
Members of that sector, such as Paychex (NASDAQ: PAYX), ManpowerGroup (NYSE: MAN) and TrueBlue (NYSE: TBI) have done very well, pleasing even the most demanding of growth investors. Due to the anemic economic recovery, companies are holding back from hiring full-time workers.
With the higher costs coming from the Affordable Care Act, or ObamaCare, there is even greater unwillingness to commit to the cost of a full-time employee, according to a recent article in The Wall Street Journal. An example of growth in the sector can been seen in Robert Half International (NYSE: RHI) -- registering earnings-per-share growth of more than 40 percent. Labor SMART (OTC: LTNC), a demand labor firm, just posted recorded earnings, that continue to grow.
And even with this growth, there is still plenty of value left in the sector for family offices.
TrueBlue, like Labor SMART, operates in the $29 billion demand labor segment of the staffing industry. That is probably the most attractive of all the units in the group due to its flexibility. The price-to-sales ratio for TrueBlue is just 0.62, meaning that every dollar of sales is selling at more than a one-third discount in the stock price. Labor SMART is even more undervalued, as its quarterly revenues are greater than the market capitalization for the company.
There is plenty of income being generated by companies in the staffing sector along with the growth and value, too.
While the average dividend yield for a member of the Standard & Poor's 500 Index is around 1.9 percent, for Paychex it is 3.32 percent. Paychex just increased its dividend by more than six percent, a robust show of strength. CDI Corp. (NYSE: CDI) pays a dividend of 3.27 percent. The dividend for Compass Diversified Holdings (NYSE: CODI) is over nine percent.
The staffing industry is in a unique position to provide for the growth, income, and value investing needs for family offices. It should continue to prosper, which will provide the long term returns all investors should seek. The income generated from Paychex, CDI Corp., and Compass Diversified Holdings will enhance the total returns.
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