We recently published a list of 10 Best Human Resources Stocks To Invest In. In this article, we are going to take a look at where Dayforce Inc (NYSE:DAY) stands against other best human resources stocks to invest in.
The US Job Market: At a Glance
According to a report by Reuters on January 23, the number of citizens in the United States applying for unemployment benefits rose slightly during the week before the release of this report. The subtle change emphasized no decline in labor market conditions. In addition to that, the report highlighted that while layoffs were particularly low, the opportunities available to people finding new jobs remained scarce and limited.
The Labor Department reported that the jobless rolls surged to the highest level in over three years during early January. For the week ended January 18, claims for state unemployment benefits increased by 6,000 to reach 223,000. On the contrary, economists polled by Reuters were expecting claims to reach 220,00. The gap can be explained by a surge in claims after the wildfires occurred in Los Angeles, with undocumented claims being even higher.
More recently, on February 5, Reuters reported that job openings fell by the most in 14 months in December 2024 but the relatively stable hiring situation pointed towards a steady labor market. The Labor Department’s Job Openings and Labor Turnover Survey suggested that for every unemployed person, there were 1.1 job openings available in December, down from 1.15 in November 2024. While this does put a serious question mark on the Fed’s easing cycle, it also raises concerns over the stability of the US economy and its future.
By the last day of December, job openings fell by 556,000 to reach 7.6 million, the largest decline since October 2023. The decline in job openings points towards uncertainty around the new administration’s policies and a general lack of confidence, especially with incoming decisions like mass deportations and broad tariffs, leaving businesses more cautious than ever. In addition to that, policymakers are also extremely cautious, given that they believe most policies are inflationary, reducing the chances of an easing cycle being continued as planned.
With the growing need for job opportunities, the demand for human resource companies and experts is at an all-time high.
Our Methodology
To come up with the names with sifted through multiple rankings available on the internet, and compiled a list of stocks in the industry. We then selected the following human resources stocks based on the hedge fund sentiment toward each stock as of Q3 2024 and picked the most popular ones. The list is arranged in ascending order of the number of hedge fund holders in each firm.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Dayforce Inc (NYSE:DAY)
Number of Hedge Fund Holders: 18
Dayforce Inc (NYSE:DAY) is a software-as-a-service company that is focused on global human capital management, time management, payroll management, and talent management. The company is transitioning to becoming fully backed and run by AI, streamlining the HR functionality for businesses further. In the fourth quarter of 2024, DAY generated $347.9 million in recurring revenue, up by 19% year-over-year. In addition to that, total revenue was $465.2 million, up by 16%. Overall, the company saw groundbreaking technologies emerge in its business functions during the year, contributing to its solid growth in revenue and profits.
On February 6, Jake Roberge, an analyst at William Blair, gave a buy rating on Dayforce Inc (NYSE:DAY). Despite a lack of recurring revenue, the company reported solid financial performance in the fourth quarter of 2024, explaining why Roberge is bullish on the stock. The analyst also explained that the company had robust sales momentum and a recovering demand situation. In addition to that, Roberge is confident that the company’s AI plans will further fuel the surge in sales and customer activity in 2025 and beyond. Analysts are also bullish on the stock and their median price target of $85 points to an upside of 30%.
Overall, DAY ranks 10th on our list of best human resources stocks to invest in. While we acknowledge the potential of DAY to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DAY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
