In this article, we discuss 11 best human resources stocks to buy. If you want to skip our detailed discussion on the human resources industry, head directly to 5 Best Human Resources Stocks To Buy Now.
Over the past two decades, the staffing industry has seen a rapid change. Gone are the days of aggressively searching newspapers and paper-postings to find employment opportunities. With stratospheric adoption of technology, human resource processes have drastically changed. Given this metamorphosis, businesses now face an unprecedented set of opportunities and challenges. Another major post pandemic change has been the demand for greater work flexibility by employers and employees. Following this, there is a strong expectation for freelance work opportunities to increase. Over the years, freelance platforms have presented a competitive ecosystem where businesses can attract candidates better suited to their needs. Furthermore, as remote work seems to be increasing, experts expect the market for staffing solutions to grow in accordance. With firms looking to outsource more human resource related affairs, competition is only expected to grow in the staffing sector.
Another major development has been the inclusion of artificial intelligence in various professions. With companies such as Oracle working on developing AI to enhance innovation in business, McKinseyexpects staffing companies to take a similar approach by incorporating AI in their cloud-based human resource platforms. A survey by Gartner reported that while only 17% of total staffing companies used AI in 2019, the percentage was set to increase to over 30% by the end of 2022. Although AI can be incorporated in various staffing procedures, it presents a series of challenges as well. The biggest challenge would be the funding costs for development and integration of AI in processes. Safety, security, and privacy are other concerns that are inherently built into AI exploration. Another technical issue could be integrating new features into currently used systems. Needless to say, there is a room for a lot of innovation in the industry.
In 2021, the PGC Group reported that the staffing industry in the United States approximately grew by 28% to generate sales in excess of $186.9 billion. It was also reported that the sector had outgrown market expectations by $6 billion. In terms of market size, the US market dominates the industry. As per IBIS World, the total market for the human resources and staffing industry can potentially exceed $760 billion in 2023.
Investors looking to diversify their holdings and benefit from the growth opportunity in the human resources and staffing market can check out stocks like Microsoft Corporation (NASDAQ:MSFT), Workday, Inc. (NASDAQ:WDAY), and Automatic Data Processing, Inc. (NASDAQ:ADP).
Our Methodology
We selected the following human resources stocks based on the hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the first quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm.
Focused on small and medium sized businesses, TriNet Group, Inc. (NYSE:TNET) primarily provides human resources consultancy. This includes services around employee benefits, payroll, and risk mitigation services. TriNet Group, Inc. (NYSE:TNET) also caters to taxation, healthcare, and retirement related services. On July 26, the company reported a Q2 non-GAAP EPS of $1.74. The revenue rose 0.8% year-over-year to $1.21 billion. TriNet Group, Inc. (NYSE:TNET) gained 4.12% upon announcement of Q2 results.
According to Insider Monkey’s first quarter database, 16 hedge funds were bullish on TriNet Group, Inc. (NYSE:TNET), in contrast to 23 hedge funds from the previous quarter. William Von Mueffling’s Cantillon Capital Management remains the largest shareholder in TriNet Group, Inc. (NYSE:TNET), with 3.4 million shares worth $275.3 million.
In addition to Microsoft Corporation (NASDAQ:MSFT), Workday, Inc. (NASDAQ:WDAY), and Automatic Data Processing, Inc. (NASDAQ:ADP), TriNet Group, Inc. (NYSE:TNET) is one of the best human resources stocks to invest in.
ManpowerGroup Inc. (NYSE:MAN) is a global provider of recruitment and hiring services. Be it Europe, Asia, or the Middle East, the company is engaged with all kinds of businesses to scout the best talent. ManpowerGroup Inc. (NYSE:MAN) provides services regarding permanent and temporary employment. In addition, ManpowerGroup Inc. (NYSE:MAN) also offers employee assessments, reviews and training. On May 5, the company declared an increase in dividend payments by 8.1% to $1.47 per share. ManpowerGroup reported a Q2 non-GAAP EPS of $1.58 on July 20, missing Street estimates by $0.03. However, revenue for the period came in at $4.9 billion, beating market consensus by $40 million.
According to Insider Monkey’s first quarter database, a total of 19 hedge funds were bullish on ManpowerGroup Inc. (NYSE:MAN), as opposed to 20 in the last quarter of 2022. Cliff Asness’ AQR Capital Management holds the largest position in the company, with 1.2 million shares worth $97.4 million.
Here is what Palm Valley Capital Management has to say about ManpowerGroup Inc. (NYSE:MAN) in its Q3 2022 investor letter:
“We acquired four new positions during the quarter—two of these were recycled. The Fund bought back Kelly Services (NASDAQ:KELYA), a prior holding, and established a new weighting in ManpowerGroup (NYSE:MAN). Both companies serve the staffing industry. Staffing is cyclical, and we expect results for these companies to deteriorate in a recession, even though margins haven’t fully recovered yet from the lockdowns. In our judgment, during previous downturns, their operating performance was acceptable for a cyclical trough. We believe the valuations for Kelly and Manpower are becoming increasingly compelling. Kelly trades at a 46% discount to tangible book value. The company’s net assets are primarily supported by a mountain of receivables. Neither Kelly nor Manpower experienced significant credit losses during the last recession. ManpowerGroup’s $4 billion Enterprise Value is 6.7x its five-year average operating income before amortization, which includes a trough in 2020. Manpower is based in the U.S., but it earns the majority of revenues from Europe. We think the firm’s European exposure has placed it in the doghouse among investors, given the unique risks facing those economies. Manpower’s translated results are also weighed down by the rocketing U.S. dollar…” (Click here to see the full text)
Insperity, Inc. (NYSE:NSP) focuses on optimizing and synchronizing the workforce for small and medium sized businesses. The company human resource functions such as consultancy, recruitment, administration, and payroll services. Insperity, Inc. (NYSE:NSP) also specializes in regulatory compliance. A valuable asset to these services is Insperity Premium – a cloud-based platform that enables companies to outsource human resource processes. It is one of the best human resources stocks to monitor.
On May 24, the company declared a 10% increase in the dividend per share, which now stands at $0.57. The dividend was distributed to stakeholders on June 22. Insperity, Inc. (NYSE:NSP) also beat Q1 top and bottom line estimates.
According to Insider Monkey’s first quarter database, 21 hedge funds were bullish on Insperity, Inc. (NYSE:NSP). In comparison to the last quarter of 2022, this number remains unchanged. Anthony Bozza’s Lakewood Capital Management holds the largest stake in the company, comprising 358,063 shares worth $43.5 million.
Lakewood Capital Management had this to say about Insperity, Inc. (NYSE:NSP) in its Q2 2020 investor letter:
“Earlier this year, the fund initiated a position in Insperity, a provider of outsourced human resources for small- and medium-sized businesses. We began purchasing shares in February as the stock declined significantly following disappointing earnings and guidance related to an unusual spike in employee benefit costs. Subsequent share price declines during the March stock market sell-off, primarily due to concerns about the health of the company’s core customer base, allowed us to purchase additional shares in a high-quality, growing and cash generative business at an extremely discounted valuation.
Robert Half Inc. (NYSE:RHI) specializes in providing human resources solutions across the globe. With presence in America, Europe, and the Middle East, the company focuses on three major segments – Contract Talent Solutions, Permanent Placement Talent Solutions, and Protiviti. The first segment focuses on talent engagement in fields such as finance, technology, creative, and legal advisory. The second segment focuses on full-time employment for accounting, finance, taxation, and compliance professionals. Lastly, the Protiviti segment aims to provide business consulting services in finance, regulatory compliance, legal consultation, digital transformations, and internal audits. Robert Half Inc. (NYSE:RHI) is one of the best human resources stocks to buy.
On July 25, Robert Half Inc. (NYSE:RHI) fell short of Wall Street estimates for Q2 revenue by $50 million and the EPS by $0.12. However, the company paid a $0.48 per share dividend to shareholders in June 2023. Dividend payments for the quarter amounted to $51 million.
According to Insider Monkey’s first quarter database, 21 hedge funds were bullish on Robert Half Inc. (NYSE:RHI). Cliff Asness’ AQR Capital Management holds the largest position in Robert Half Inc. (NYSE:RHI), with over 1.1 million shares valued at $89.9 million.
FMI made the following comment about Robert Half International Inc. (NYSE:RHI) in its second quarter 2023 investor letter:
“Robert Half International Inc. (NYSE:RHI) is the market leader in professional staffing for small and medium sized businesses. The company has a premier temporary and permanent placement franchise in the field of accounting (Accountemps) and finance, while its Protiviti business has become a strong domestic and international consultancy. RHI’s reinvestment in technology, including its national database, candidate performance scoring, and proprietary AI and matching capabilities are driving share gains versus fragmented competition. The business model is asset-light and generates consistently strong returns-on-capital, industry leading margins, and free cash flow. The less cyclical Protiviti business accounts for 30% of income. Capital allocation at RHI has been focused on reinvestment, share repurchases, and dividend increases. These factors should result in less overall cyclicality in EPS going forward. The shares are off 40% from its 2022 highs. We feel that the discounted valuation is reflective of current recession worries, which could lower demand for labor. Additionally, there are concerns around AI and the disruption that it could have on accounting. Our view is that the sentiment around the latter appears overdone, as demand for accountants has increased over time despite major advances in productivity tools.”
Korn Ferry (NYSE:KFY) is a global provider of consultancy services. Although the firm focuses on providing consulting and staffing services, it is also engaged in offering outsourcing services for different business processes. Korn Ferry (NYSE:KFY) helps businesses formulate human resource strategies for rewards, structuring, appraisals, and performance evaluation. It is one of the best human resources stocks to watch.
On June 27, Korn Ferry (NYSE:KFY) announced a 20% increase in dividends, which took the dividend per share to $0.18 for the quarter. The dividend is payable on July 31, to shareholders of record as of July 7. For the past 4 quarters, the dividend was maintained at $0.15 per share.
According to Insider Monkey’s first quarter database, 27 hedge funds held a bullish position in Korn Ferry (NYSE:KFY). In contrast, the stock was found in 20 hedge fund portfolios in the previous quarter. Chuck Royce’s Royce & Associates is the largest position holder in the company, with 857,222 shares worth $44.3 million.
“Korn Ferry (NYSE:KFY) is a global organization consulting firm that has benefited from strong labor demand. After exceeding expectations for more than a year, the company fell short in the most recent quarter as strong top line growth finally moderated. With economic conditions deteriorating around the world, investors may also anticipate additional deceleration.”
A household name for the global freelance community, Upwork Inc. (NASDAQ:UPWK) provides a platform that connects skilled professionals and businesses around the world. The company has created an ecosystem where it matches businesses with the right talent for a diverse set of skills. On May 3, the company reported its Q1 financial results. Upwork beat Wall Street estimates for EPS and revenue by $0.06 and $1.8 million, respectively. The company has also brought in some new leadership, as Erica Gessert moved from Paypal to be the new CFO at Upwork Inc. (NASDAQ:UPWK) at the end of March 2023.
According to Insider Monkey’s first quarter database, 31 hedge funds were bullish on Upwork Inc. (NASDAQ:UPWK), in contrast to 30 hedge funds in the previous quarter. David Brown’s Hawk Ridge Management held the largest stake in the company, worth $62 million.
Like Microsoft Corporation (NASDAQ:MSFT), Workday, Inc. (NASDAQ:WDAY) and Automatic Data Processing, Inc. (NASDAQ:ADP), Upwork Inc. (NASDAQ:UPWK) is one of the best human resources stocks to invest in.
Here is what Spree Capital Advisers has to say about Upwork Inc. in their Investor Letter:
“Early in the fourth quarter we meaningfully increased our position size in Upwork (UPWK). Upwork is a global employment marketplace that enables businesses to vet, hire, and manage talent as part of their distributed workforce. Upwork facilitates labor and demand side connectivity on a global scale by providing the infrastructure to create trust and to streamline talent sourcing, contracting, analysis and payment. Freelancers benefit from having a reputation ranking system that feeds their marketing channels, allowing them to have access to quality, flexible work and on time compensation. Businesses on the demand side benefit by having extensive access to specialized talent, enabling faster and more cost effective hiring, and by having the strategic optionality inherent in the ability to flex a portion of their workforce based on changing demand requirements.
