Great Stock to Play Obamacare

In Monday’s Goldman Guide we discussed the changing job market in the U.S. and the shift to part-time employment.  A great article was featured in the Wall Street Journal over the weekend from the CEO of one of the largest temp agencies.  This was a must-read.

http://online.wsj.com/article/SB10001424127887324492604579087044033601178.html. 

There is no doubt that the job market has not made a recovery like Wall Street.  Obamacare is a main contributor to this, again one of the unintended consequences of ‘good intentions’ from government.  Stock plays on this dynamic should pay off for the foreseeable future.

As we mentioned yesterday, Robert Half (NYSE—RHI—$38.37) stands out as a leader in the publicly traded temp agency and job placement firms and stocks.

Robert Half International Inc. provides staffing and risk consulting services in North America, South America, Europe, Asia, and Australia. The Company operates through Accountemps, Robert Half Finance & Accounting, OfficeTeam, Robert Half Technology, Robert Half Management Resources, Robert Half Legal, The Creative Group, and Protiviti divisions. The Accountemps division offers temporary staffing in the accounting, tax, and finance fields. The Robert Half Finance & Accounting division places full-time accounting, financial, tax, and banking personnel.

The shift to temporary employment and the need for placement services will be huge catalysts for the Company going forward, reflected in the 2013 to 2014 earnings per share growth forecast for over 20% increase to $2.12.  From a valuation perspective this estimate puts in FY P/E at just over 18, well under the industry standard of 22.  The stock appears to be under some major accumulation with almost 1 million shares traded per day over the last three months on a 20% rise in price over that time.  Finally, the 5-day, 20-day, and 50-day DMA are all very bullish when analyzing the charts. 

RHI is in the right place at the right time as it relates to the U.S. economy and job market.  When you add in our current market formula of forward earnings/valuation, momentum, and bullish technical analysis, particularly DMA, the stock is set to take off.  We think a price of $50 sometime in 1H2014 is a level RHI will reach.

Have a great day!

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours. Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co.

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