3 Staffing Stocks to Consider Despite Industry Challenges

Core Insights - The Staffing Firms industry is expected to gradually return to pre-pandemic levels, enabling companies to pay regular dividends [1] - The demand for staffing agencies is driven by the rising adoption of remote work and hybrid models, supported by technological advancements [1][4] - Companies like HireQuest, Inc. (HQI), Heidrick & Struggles International, Inc. (HSII), and Cross Country Healthcare, Inc. (CCRN) are benefiting from these technological developments [1] Industry Overview - The Zacks Staffing industry includes a variety of companies providing human resources and workforce solutions, covering employment screening, recruitment, payroll administration, and more [2] - Specialized services offered by some firms include staffing and risk consulting, professional staffing, and global business solutions [2] Market Trends - The industry is mature with stable demand, showing resilience despite economic downturns in manufacturing, and revenues are expected to recover to pre-pandemic levels [3] - The significant rise in remote work has led staffing agencies to focus on flexible staffing solutions, catering to evolving workplace preferences [4] Technological Advancements - The staffing sector is increasingly utilizing technology to enhance operations and service delivery, with AI-driven tools and platforms improving talent acquisition processes [5] - The adoption of social media, Big Data, and secure communication platforms like Zoom and Microsoft Teams is also on the rise [5] Industry Performance - The Zacks Staffing Firms industry currently holds a Zacks Industry Rank of 198, placing it in the bottom 20% of 249 Zacks industries, indicating sluggish near-term prospects [6] - Over the past year, the industry has underperformed the S&P 500, declining by 17.4% compared to the S&P 500's growth of 24.2% [8] Valuation Metrics - The industry is trading at an EV-to-EBITDA ratio of 7.48X, significantly lower than the S&P 500's 17.7X and the sector's 27.05X [10] - Historical trading ranges for the industry have been between 7.28X and 8.92X over the past five years, with a median of 7.95X [10] Company Highlights - Heidrick & Struggles (HSII): Benefiting from strong performance in executive search and on-demand talent services, with a Zacks Rank of 3 and a 17.5% share price increase over the past six months [12][14] - Cross Country Healthcare (CCRN): Improving from strong relationships and growth in home care and physician staffing, with a Zacks Rank of 3 and a 28.6% share price increase over the past six months [15][17] - HireQuest (HQI): Leveraging its franchise model for growth, with a Zacks Rank of 3 and a 14.4% share price increase over the past six months [18][19]