We came across a bullish thesis on HireQuest, Inc. (HQI) on Substack by Giuliano. In this article, we will summarize the bulls’ thesis on HQI. HireQuest, Inc. (HQI)’s share was trading at $14.86 as of Dec 16th. HQI’s trailing and forward P/E were 106.14 and 17.89 respectively according to Yahoo Finance.
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HireQuest, a staffing company founded in 1991 by Richard Hermanns and Dan McAnnar, has evolved from an on-demand labor provider into a multi-faceted staffing firm offering long-term placements and executive recruitment services. Its growth has been driven by a franchising model, which provides a distinct competitive advantage over smaller peers. With Richard Hermanns owning a 38% stake and long-time partner Edward Jackson holding 18.7%, the company benefits from deeply aligned leadership incentives.
HireQuest’s franchising model addresses key challenges in the staffing industry, such as funding working capital and managing compensation insurance. By centralizing these functions and leveraging its scale across 400+ branches, HireQuest secures better terms from insurance providers and reduces financial strain for franchisees. This model also avoids the overhead of staffing company-owned offices, eliminating the need for branch managers and enhancing margins. High turnover, a common issue in the industry, is mitigated as franchise owners, deeply invested in their branches, ensure better execution and stability.
In 2019, HireQuest went public through a reverse merger with the mismanaged Command Center, showcasing its expertise in M&A and the strength of its franchising approach. Since 2018, HireQuest has expanded its network from 100 to over 400 locations through acquisitions. A key strategy is converting company-owned offices from acquired firms into franchise agreements, significantly reducing the effective acquisition cost. This approach preserves managerial continuity, ensuring customer retention and minimizing the revenue loss often associated with staffing M&A.
The staffing industry’s fragmentation further positions HireQuest for sustained growth. Dominated by small, often family-owned offices that larger players overlook, the sector provides HireQuest with ample opportunity to deploy capital at attractive returns. With a proven model and fertile ground for expansion, HireQuest stands poised to capitalize on its unique position, delivering long-term value through strategic acquisitions and operational excellence.
HireQuest, Inc. (HQI) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 4 hedge fund portfolios held HQI at the end of the third quarter which was 2 in the previous quarter. While we acknowledge the risk and potential of HQI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than HQI 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 was originally published at Insider Monkey.
