How to Profit from the Improved Jobs Numbers

The stock market is looking higher. The DOW and the S&P 500 closed up for the fifth straight month as we enter into the second half of what has largely been a mixed and cautious year.

For growth investors, the good news is that small-cap stocks came back in June with a 5.15% advance and are easily leading the broader market. Technology also fared well with the NASDAQ up 3.9% in June. Blue chips and large-caps trailed the growth side. In the first half, the S&P 500 leads with a 6.07% gain followed by the 5.54% advance in the NASDAQ.

And while stocks are edging higher towards new records, we are also seeing positive gains in the critical jobs numbers. This is essential for the economy and consumer confidence.

We saw strong non-farm payroll jobs numbers for June last Thursday with the creation of 288,000 new jobs, which easily beat the consensus 215,000 estimate and the 244,000 jobs in May. Better yet, the unemployment rate also fell to 6.1%, the lowest level in nearly six years.

The growth in the jobs numbers will gain more traction in the stock market when the reading can surpass the 300,000 level, which could trigger heightened optimism.

What the higher jobs numbers mean is more business for the jobs placement firms, from the everyday jobs to management and executive positions.

A contrarian and speculative play on the jobs numbers recovery is Monster Worldwide, Inc. (NYSE/MWW), which currently sits around $6.85 per share with a market cap of $623 million.

Monster Worldwide runs the widely known job search web site Monster.com and was the first employment company to shift from the traditional jobs postings to electronic digital postings of jobs in 1994. The company has built a global presence with operations in about 50 countries, including China via its wholly owned ChinaHR.com.

This stock used to be a former Wall Street darling during the Internet era in the late 90s and in early 2000, when the stock was trading at more than $80.00 a share—which, of course, was ridiculous. The stock imploded with the Internet crash in early 2000 and then was subsequently bashed by the recession and massive job losses to come with the Great Recession in 2008.

Monster Worldwide collapsed to $4.02 in April 2012, prior to its rally back to the $7.00 level. The stock has easily beaten the S&P 500 over the past 52 weeks with an advance of 36.0% versus the 22.2% gain in the index.

 

Chart courtesy of www.StockCharts.com

The company has a long way to go as far as fundamentals, but constant improvement in the jobs numbers will likely aid in the stock’s price recovery.

Revenues have declined in two straight years, from $993.65 million in 2011 to $807.58 million in 2013. For this year, revenues are estimated to contract 1.3% but rally 2.3% in 2015, according to Thomson Financial. While revenues are expected to fall, we could see a positive rise in 2015 if the jobs numbers continue to strengthen.

In my view, Monster Worldwide is worth a look for the aggressive growth investor looking for a contrarian investment opportunity, especially should the jobs numbers continue to improve.

This article How to Profit from the Improved Jobs Numbers was originally posted at Daily Gains Letter