7 Stocks to Buy on the Latest Jobs Report

While governments typically aim for a resilient labor market, a labor market that is too hot could pose significant risks, forcing changes in how stocks are bought. In fact, American investors should consider adjusting their strategies to reflect future shifts in the economy.

Circumstances look pretty good on paper. According to CNN, the US economy added 311,000 jobs in February, beating expectations. So far, so good. However, we are currently dealing with increased inflation. Ahead of the jobs report, Federal Reserve Chair Jerome Powell left the door open for higher and faster rate hikes. Given the latest data, the central bank may have no choice but to turn aggressively hawkish. In that case, it could be extremely difficult for the Fed to pull off a soft landing; that is, controlling inflation without triggering a recession. Higher rates, in turn, can reduce employment statistics, leading to confused workers. With the stage set for drastic change, these are the stocks to buy in the latest jobs report.

Robert Halb (RHI)

On the superficial level, the mention of recruitment agencies Robert Half (NYSE:RHI) as one of the stocks to buy because of a resilient job market doesn’t seem to make much sense. After all, in the tight job market, workers are quick to find opportunities elsewhere. So it seems counterproductive to use the services of a middleman.

The RHI share has certainly not reacted very well lately. Last week, the stock stumbled over 5%. And while RHI is up for the year, it’s down almost 29% over the past year. However, with the Fed likely to raise interest rates to fight inflation, the economy could slip into recession. In fact, the mass layoffs we’ve seen since 2022 have now affected sectors other than technology. Financially, RHI also offers an interesting buying opportunity for shares. First of all, the company enjoys a stable balance sheet. In addition, it is an operational powerhouse. For example, the three-year sales growth rate is 8.3%, exceeding almost 68% of the industry. Its net margin is 9.09%, beating 71% of its peers. Therefore, it is worth looking into.

Kelly Services (KELYA)

Another staffing agency Kelly Services (NASDAQ:Kelja) seems an odd pick for stocks to buy on a strong jobs report. Under normal circumstances, I would wholeheartedly agree. Why deal with a middleman when you can easily secure another opportunity in a tight job market? My concern, however, is sustainability. In other words, I just don’t think the job market will be as resilient.

So yes, while KELYA looks ugly in terms of chart performance, it could be gaining ground. Specifically, Kelly Services doesn’t just focus on office jobs. Rather, it also facilitates connections for people seeking warehouse operations jobs. Again, with mass layoffs mounting, people could start to get desperate and take whatever they can. In this scenario, Kelly Services makes sense.

Also, the company offers some enticing tax characteristics. Perhaps most notably, KELYA is rated underrated. The market currently rates KELYA at a forward multiple of 10.69. At a discount to earnings, Kelly Services ranks better than 70.19% of the field.

Upwork (UPWK)

For those who want to take extreme risk when buying their stocks, processing (NASDAQ:UPWK) could be very interesting. During the worst of the coronavirus pandemic, many employees have shifted their work to remote operations. However, as Covid-19 fades, a growing number of companies have called their employees back into the office. The unchanging conflict can provide expansion opportunities for the gig economy.

Certainly, the gig economy – or the independent contractor (freelancer) segment – has always been an attractive concept. But now that the majority of employees have had a taste of the gig lifestyle, they may want to go full-time. If this is the case, Upwork could benefit from freelance opportunities as a direct intermediary.

With full disclosure, Upwork poses significant risks. To be honest, his record shows dubious statistics. Also, the company is deeply unprofitable despite posting a very robust three-year revenue growth rate of 20.1%. However, Wall Street analysts think UPWK is a buy by consensus. Also, their average price target is $18.22, which represents an upside potential of almost 72%.

U-Haul (UHAL)

mention u haul (NYSE:UHAL) may seem an incredibly strange idea for buying stocks in the latest jobs report. After all, given the booming labor market, there is probably no reason to move out of the city. In fact, UHAL was down over 3% in value last Friday when we saw the jobs report.

Still, UHAL has gained nearly 2% since opening in January. And over the past year, it’s up just over 4%. In general, one possible reason for the bullish sentiment could be centered on expected migration trends. In particular, if the Fed fails to pull off a soft landing, a recession is likely to occur. In such circumstances, it may be better for workers to move from high-cost metropolitan areas to lower-cost regions. Additionally, U-Haul has some attractive financial metrics. Operationally, the company’s three-year revenue growth rate is 15%, outperforming 82.28% of its peers. Also its free cash flow (FCF) growth rate over the same period is 40.3%, over 80.72% of the industry.

Financially, the market values ​​UHAL at 7.14 times its operating cash flow. In contrast, the sector median is 11.17 times, making UHAL undervalued and one of the stocks to buy.

Dollar Tree (DLTR)

As mentioned, on the surface, mention money tree (NASDAQ:DLTR) as one of the stocks to buy during a period of robust labor market activity seems bizarre. People who have a job can easily afford to shop at a real grocery store. Heck, they might even skip the cooking and go out and order. However, the prospect of higher interest rates suggests that the jobs data could hit a wall at some point. With the Fed’s main motivation focused on controlling inflation, the employment sector may become less important. Put another way, some workers could really be pawns in the Fed’s high-stakes chess game to destroy inflation.

When this is the case, people need access to essential consumer goods at the lowest possible price. This will likely invariably benefit discount dollar stores like Dollar Tree. To be fair, those who apply for DLTR will be at risk. In all honesty, the company’s balance sheet could be better. Still, Dollar Tree’s solid operating stats (specifically, revenue and net margin) should make DLTR one of the stocks to buy.

Alphabet (GOOG, GOOGL)

on a superficial level, alphabet (NASDAQ:GOODNASDAQ:Google) seems like a risky name for stocks to buy after a strong jobs report. In fairness it is. For example, Class C GOOG stock has lost more than 30% of its stock value in the last 365 days. Still suffering from the shocks of 2022, GOOG desperately needs a positive catalyst to ignite sustained momentum.

However, that catalyst may come in the form of a reversal in labor market gains. Suppose the Fed becomes extremely restrictive in its monetary policy. As a result, rising borrowing costs should impact demand across the board and lead to mass layoffs. And we’re not just talking about some sectors involved, but possibly the majority. Where will canceled worker bees go? Whether it’s looking for a new opportunity or ways to gain an edge (e.g. to bolster a resume), people are turning to Google. Over time, the inflow of volume should boost digital advertising revenue, making GOOG one of the most interesting stocks to buy.

Microsoft (MSFT)

As a consumer tech giant associated with multiple areas, Microsoft (NASDAQ:MSFT) is one of the best stocks to buy. And almost context-independent. However, under the scenario of a determined Fed poised to kill inflation, MSFT should attract significant attention from market participants. With rising borrowing costs leading to job losses, Microsoft could be the ideal investment.

How come? Simply put, Microsoft owns LinkedIn. And you can almost believe the bank that many will turn to the site as layoffs grow in scale and scope. Personally, I’ve seen many of my LinkedIn contacts detail their struggles in the job market in hopes of finding new pastures. Some become quite successful in their pursuits. Plus, the basic LinkedIn subscription is free. So you might as well strike. Finally, Microsoft enjoys very attractive financial metrics. From strong earnings to cash flow to profit margins, MSFT is stacked. In addition, there is a stable balance sheet. As such, it’s one of the stocks to buy.

On the day of publication Josh Enomoto had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author and are governed by InvestorPlace.com Posting Policies.