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Seven Potential Employment, And Investor Profit Opportunities

Companies / Investing 2011 Oct 21, 2011 - 07:34 AM GMT

By: Money_Morning


Best Financial Markets Analysis ArticleLarry D. Spears writes: With the U.S. unemployment rate steady at 9.1% and President Obama's jobs plan creating more conflict than opportunity, it's hard to believe there are U.S. companies that are hiring.

But there are.

Even taking into account the gloomy economic outlook, these companies project growth into next year that will increase revenue and require more employees.

That's good news for job seekers, but it benefits investors as well, since they will have the opportunity to profit from the higher share prices that come as a result.

So here are the sectors the most hiring right now, as well as seven companies that could parlay employment opportunities into higher profits.

Real Job Growth vs. Temp Hires
Some of the biggest hiring increases are coming from the U.S. auto industry.

Ford Motor Co. (NYSE: F) recently announced plans to hire as many as 7,000 new workers by the end of 2012. Many of the new positions will help develop new battery-powered cars, but they also reflect the company's improved earnings. After losing $30.1 billion in the period from 2006 through 2008 and borrowing $23.4 billion to survive, Ford earned $9.28 billion over the past two years.

Ford's improvement spilled into the rest of the auto sector, with both General Motors Co. (NYSE: GM) and Chrysler Group LLC (which is now partnered with Italy's Fiat SpA) ramping up hiring over the past year.

Healthcare, medical, and drug companies also have picked up hiring in a trend that is expected to continue into 2012. According to human resources publication Benefits Pro, healthcare jobs now account for 10.8% of the total U.S. workforce, including 30,000 new positions created in August when overall U.S. job growth was flat.

Healthcare stocks have responded to the sector's growth. MSN Money on Oct. 4 posted the top performing stocks so far this year, which included five companies in the medical/healthcare sector boasting gains of 30% or more.

Still, you must be aware of potential traps when searching for the job-adding sectors. Some companies are only hiring seasonal or temporary workers, and their short-term payroll increases won't translate into stock-price gains.

Many food industry companies - e.g., market darling Chipotle Mexican Grill Inc. (NYSE: CMG) - are doing a lot of hiring, but mostly for low-paying or seasonal jobs. While some businesses' hire rates do reflect strong growth, they also get boosts from high turnover.

Same with the retail sector. The recent hiring leaders include everybody from Wal-Mart Stores Inc. (NYSE: WMT) to RadioShack Corp. (NYSE: RSH). However, virtually all those hires are temporary and keyed to the holiday shopping season - which, given the number of people still lacking regular, full-time jobs, may turn out to be more of a drag on growth than a positive stock-price factor.

Seven U.S. Companies That Are Hiring
After weeding out the employers only adding temporary and seasonal workers, here's a list of companies that are growing their workforce and will also see gains in stock price. We'll start with these three favorites from the healthcare sector:

•Watson Pharmaceuticals Inc. (NYSE: WPI), recent price $66.63 - Although Watson's stock has been a stellar performer so far this year - rising more than 30%, - it's set to soar even higher. As the world's fourth-largest maker of generic drugs, Watson will see a substantial demand increase as new cost-cutting mandates hit the medical field. The resulting market growth is expected to boost Watson's 2011 revenue by 25% to $4.5 billion. It's already been hiring new production people to handle the huge expected sales jump for its generic version of Lipitor, the cholesterol-fighting drug on which Pfizer Inc. (NYSE: PFE) loses patent protection in November. The stock pulled back from its 52-week high of $73.35 over the past two weeks, but analysts' average price target is $80 a share - a 20% jump from where the stock is trading now.

•LHC Group Inc. (Nasdaq: LHCG), recent price $17.21 - LHC, which expects to hire 900-plus nurses, managers and other workers in the next year, provides healthcare services to patients through a network of home-nursing agencies, hospices and long-term acute-care hospitals in 18 states, mostly in the South. The company is expected to earn $2.17 a share in fiscal 2011, giving it a price/earnings (P/E) ratio of just 6.88. Analysts project earnings per share of $2.29 next year. The stock's average target price of $28 is about 63% higher than where it currently trades.

•CVS Caremark Corp. (NYSE: CVS), recent price $34.72 - CVS is a leading U.S. pharmacy with more than 7,100 retail stores, 44 specialty pharmacies, a mail-order prescription service and a number of retail health clinics operating as MinuteClinics. The company currently has 201,000 employees and is looking to hire about 1,000 more for positions ranging from pharmacy technicians to store managers and IT professionals. CVS is expected to earn $2.78 a share in 2011, giving it a P/E of 11.7, with a jump to $3.19 next year. It's off its 52-week high of $39.50 and analysts forecast a one-year target of $44.00. The 48-cent dividend provides a yield of 1.4%.
Outside the healthcare industry, we like these growing companies:

•PNC Financial Services (NYSE: PNC), recent price $51.33 - The financial sector has been under major pressure of late, but PNC continues to grow and prosper. The company has retail, commercial and investment-banking services in 13 states and Washington, D.C., runs a leading wealth-management service and is looking to hire more than 1,000 people in the months ahead. That's justified by current-year earnings estimates of $6.01 a share, providing a P/E ratio of just 7.60, with growth to $6.35 next year. The stock is well off its 52-week high of $65.19, but analysts forecast a rebound to at least $71.50 in 2012. Its $1.40 dividend per share yields 2.70%.

•Snap-on Inc. (NYSE: SNA), recent price $49.38 - The people who aren't buying new cars from the Big Three automakers need to keep their old vehicles running, and that's where Snap-on stands to gain. It develops, manufactures, and distributes tools and equipment worldwide. That includes both hand and power tools for the home mechanic, and diagnostic and heavy-duty equipment for full-service repair shops. It also supplies franchisees with mobile repair trucks. The stock has taken a beating of late thanks to a brokerage downgrade that sparked a technical break to a new 52-week low. However, SNA still expects good growth - earnings this year of $4.23 a share, rising to $4.96 next year - and is looking to hire up to 600 people to handle it. Analysts project the share price will rise to around $71 over the next 12 months - about 44% higher than the stock's current level.

•Caterpillar Inc. (NYSE: CAT), recent price $83.56 - Caterpillar is a leading global manufacturer of construction machinery and equipment. Its stock has been beaten down in recent weeks, but strong customer demand has led the company to increase its worldwide workforce by 19,000 over the past year. More hiring is scheduled for its production and engineering arms. Earnings for this year are expected to reach $7.07 a share, a 70% increase from year-ago levels, with a further rise to $9.18 a share next year. Analysts project a rebound in the stock price to $133.50, a 60% gain from present levels. The $1.84 dividend also provides a current yield of 2.2%.

Finally, here's one bonus pick I particularly like after researching this article - one whose growth and increased hiring is most likely because of the economy rather than a result of any pending recovery:

•Brown-Forman Corp. (NYSE: BF.B), recent price $74.57 - Louisville, Kentucky-based Brown-Forman employs 4,440 people worldwide (and has added about 300 recently), all engaged in the manufacturing and distribution of Jack Daniel's, Southern Comfort, Finlandia vodka and 32 other brands of wines and liquors. The company, which pays a $1.28 dividend (1.70%), earned $3.57 a share last year and is expected to hit $4.07 next year. Enough said - except to note that, strangely, Brown-Forman's share price seems to rise every time the Dow Jones Industrial Average falls 200 points or more.

Source :

Money Morning/The Money Map Report

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