Plenty More Upside in These Employment Stocks: Robert Half International Inc. (RHI), Intuit Inc. (INTU)

I prefer RHI or something like Intuit Inc. (NASDAQ:INTU). The latter has a strong presence in the SMB marketplace and is aggressively expanding its SMB group offerings, and its employment and payment management solutions are growing by double digits. I think the market underestimates the potential for cross selling with the cloud, and Intuit has strong prospects. Its core DIY consumer tax revenue offering generated around 45% of income last year, but its payment, employment, and financial management solutions brought in 34.7% of income, and its rising in the mid teens as opposed to single digits for the consumer tax offerings. Arguably it is the SMB solutions that will guide the direction of the stock.

Two other interesting notes in the commentary were the usual points about how this recovery has been categorized by the determination of employers to hire temps over permanent staff, and acknowledgement of RHI’s desire to move into more technology staffing solutions. An acquisition is always possible in this area, as the company has cash. One company that might fit the bill is a tech-heavy staffing firm like On Assignment, Inc. (NYSE:ASGN). The stock has doubled over the last year, but it is still not outside the realms of possibility for RHI to take a look. It’s growth rates are hard to find in the industry and its end markets suit RHI’s need for more technology exposure.

It’s interesting to look at On Assignment’s full year outlook in order to see where employment growth is. It forecast ‘high 20’s’ growth in its IT and engineering operation, mid to high teens in healthcare, high single digits for Physicians, and a small reduction in Life Sciences. So IT is doing well, but markets exposed to government funding for academic research are suffering.

Where Next For Robert Half?

I don’t like buying stocks after they have been on this kind of run, but I do think there is good potential here. The US employment numbers should be good going forward and RHI’s margins are doing fine. Any sign of stabilization in Europe will act as a growth kicker in the future, and with mid teens earnings growth forecast plus strong cash flow generation RHI can appreciate from here.

My only concern is that the markets appear to be pricing in every rosy scenario right now. And since they reserve the right to change their mind without telling me, I would rather try and buy into RHI on a dip.

The article Plenty More Upside in These Employment Stocks originally appeared on Fool.com and is written by Lee Samaha.

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