The trend in employment for healthcare workers does not appear to be short-term since the number of baby boomers needing medical care increases daily, so Matt McCall, of Penn Financial Group, highlights two staffing companies that are both focused on the industry.
On Wednesday the ADP reported the 190,000 private sector jobs were created in August. The number was above the revised July number of 177,000, but was well below the estimate of 210,000. The sectors helping push the number up from last month were professional and business services (+29,000), trade, transportation, utilities (+28,000), and construction (+17,000). The fact that 173,000 of the jobs created were service based—not goods producing—is a testament to where the US economy is at this point in time.
The one bright spot in the recent ADP reports as well as the Bureau of Labor Statistics (BLS) report that will be released Friday morning has been the healthcare related jobs. The high demand for nurses and doctors around the country have helped keep people in the sector basically at full employment. According to the BLS, as of July the healthcare sector has an unemployment rate of 3.6%.
As healthcare facilities search for top candidates there is an industry that will benefit, staffing for healthcare firms.
Cross Country Healthcare, Inc. (CCRN) provides staffing and workforce solutions for the healthcare industry. The $458 million company has been experiencing robust earnings growth since it became profitable in 2013. This year earnings per share are expected to increase from 9 cents last year to 36 cents in 2015 before increasing another 24% to 44 cents in 2016. From a technical viewpoint, the stock is even more impressive as it hit a 7-year high last month and is trading above all its moving averages.
Another stock in the sector that is also trading above its moving averages is AMN Healthcare (AHS). The company provides similar services to the healthcare industry and it operates under three segments: nurse staffing, locum tenens staffing, permanent physician placement. The larger, $1.6 billion company, offers investors attractive fundamentals with impressive bottom line growth. Earnings per share are set to come in at $1.28 this year, an increase of 73% from 2014. But what are even more impressive about the numbers are the upward revisions in the earnings estimates over the last couple of years. If that trend continues it should correlate directly to a higher stock price.
The trend in employment for healthcare workers does not appear to be short-term as the number of baby boomers needing medical care increases daily. With the second largest demographic at a point in life where healthcare needs are in demand, the staffing companies focused on the industry should continue to outperform.
Matt McCall, Founder and President, Penn Financial Group
