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James Li
James Li
Articles (1538) 

5 Business Services Companies to Consider in December

Stocks have good business profitability and are trading at attractive GF valuations

December 04, 2020 | About:

In light of solid growth in transportation and warehousing jobs during the month of November, five business services companies with high profitability and attractive GuruFocus valuations are Maximus Inc. (NYSE:MMS), Insperity Inc. (NYSE:NSP), PROG Holdings Inc. (NYSE:PRG), SPAR Group Inc. (NASDAQ:SGRP) and UniFirst Corp. (NYSE:UNF) according to the All-in-One Screener, a Premium feature of GuruFocus.

November job growth moderates, but transportation and warehousing leads

On Friday, the Bureau of Labor Statistics reported that total nonfarm payrolls increased 245,000 during November, underperforming the consensus estimate of 440,000 as accelerating coronavirus cases in the U.S. prompted new lockdown orders in several states.

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Despite the moderation in job growth, the Labor Department observed notable gains in transportation and warehousing, professional and business services and health care. Transportation and warehousing added 145,000 jobs in November and is now just 123,000 jobs below the February level. Likewise, professional and business services added 60,000 jobs during the month.

As such, investors may find opportunities in the business services industry, which includes companies that engage in warehousing, consulting, rental and leasing, security and protection and staffing and employment services according to GuruFocus' industry overview pages.

The Screener listed five business service companies that have high financial strength and profitability and are trading below their GuruFocus fair value. The website-exclusive measure of intrinsic value considers a company's historical valuations and adjusts for two things: past performance and future growth estimates.

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Maximus

Shares of Maximus traded around $70.85, showing that the stock is modestly undervalued with a price-to-GF Value ratio of 0.74.

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The Reston, Virginia-based company operates government health and human services programs in the U.S. and internationally. GuruFocus ranks the company's financial strength 7 out of 10 on several positive investing signs, which include a strong Altman Z-score of 6 and interest coverage and debt ratios that outperform over 80% of global competitors.

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Maximus' profitability ranks 8 out of 10 on the back of returns outperforming over 84% of global competitors. Gurus riding the company's high profitability include Pioneer Investments (Trades, Portfolio) and Jim Simons (Trades, Portfolio)' Renaissance Technologies.

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Insperity

Shares of Insperity traded around $88.25, showing that the stock is modestly undervalued with a price-to-GF Value ratio of 0.85.

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The Kingwood, Texas-based company provides workforce optimization and workforce synchronization solutions primarily to small and midsize enterprises. GuruFocus ranks the company's profitability 8 out 10 on the back of returns and three-year earnings growth rates outperforming over 82% of global competitors.

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PROG Holdings

Shares of PROG Holdings traded around $56.98, showing that the stock is fair but slightly undervalued with a price-to-GF Value ratio of 0.96.

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The Atlanta-based company said on Tuesday that it started operating as a standalone business following its spinoff from Aaron's. The company operates retail stores that provide lease-purchase solutions for a wide range of industrial products.

SPAR Group

Shares of SPAR Group traded around 98 cents, showing that the stock is fairly valued with a price-to-GF Value ratio of 0.96.

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GuruFocus ranks the White Plains, New York-based merchandising company's profitability 8 out of 10 on the back of three-year revenue and earnings growth rates outperforming over 88% of global competitors.

UniFirst

Shares of UniFirst traded around $189.80, showing that the stock is fairly valued with a price-to-GF Value ratio of 0.99.

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GuruFocus ranks the Wilmington, Massachusetts-based company's profitability 8 out of 10 on the back of a four-star predictability rank and profit margins outperforming over 70% of global competitors.

Disclosure: No positions.

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