It's a fantastic time to be a staffing agency.
U.S. unemployment is down to 4.0%. That's the lowest it's been since late 2000, before most of today's high school seniors were born. And the United States is now at a record 95 consecutive months of job growth.
However, demand for labor is still strong, with 7 million jobs left unfilled.
Today we've got a talent-recruiting and staffing company that's doing more than just riding the wave of job creation. It has honed in on four of the fastest-growing labor markets to maximize its profitability.
Plus, key metrics suggest it's trading well below its fair value. We could easily see this stock double in the near future.
It's no surprise that it got a top score from our Money Morning Stock VQScore™ system.
The days when companies could rely on their own internal HR departments for all their staffing needs are rapidly disappearing. Technology and globalization has made the workforce more complex and more diverse.
Demographic changes are also a contributing factor. By 2050, the Bureau of Labor Statistics (BLS) projects that the U.S. population over 65 will be double what it was in 2012.
That shift is leading to workforce shortages in key industries.
One shortage that's particularly critical is in truck drivers, with a current U.S. labor shortage of about 50,000. Skilled construction workers are also in short supply. A survey conducted this year by USG Corp. and the U.S. Chamber of Commerce showed that 80% of construction industry leaders were concerned about the effect of worker shortages on worksite safety.
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That's why the service of an expert staffing company like the one we're bringing you today is becoming an absolute necessity for so many businesses. It ensures that companies get the most qualified candidates.
And this company is the best in the game. It is the No. 1 global provider of Recruitment Process Outsourcing (RPO), according to research firm Everest Group.
In addition to trucking and construction, it also specializes in food prep and service as well as customer service representatives - two more of the fastest-growing labor markets in the country according to BLS.
As the global economy shifts, these sectors are where the jobs are moving. And this company is going to be banking big gains for years - maybe decades - to come.
This Global Market Leader Still Has a Lot of Room to Grow
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TrueBlue Inc. (NYSE: TBI) got its start in 1989 as a small staffing agency in Kent, Wash., called Labor Ready Inc.
Now headquartered in Tacoma, TrueBlue connects more than 740,000 people per year to paying jobs at about 130,000 companies. And no one company accounts for more than 3% of revenue, demonstrating how well diversified TrueBlue's business is.
That's enough to generate $2.5 billion in annual revenue, a figure that's growing by double-digit percentages every year.
TrueBlue operates through three main brand segments: PeopleReady, Staff Management SMX, and PeopleScout.
PeopleReady specializes in filling temporary positions to supplement companies' full-time workforces. This has been one of the quiet boom sectors of the current economy. According to figures from BLS, temp staffing employment is growing at a faster pace than the rest of the job market.
PeopleReady offers its own mobile app, JobStack, which matches temp workers to open positions based on algorithms. This effectively allows the company to stay open 24/7 - and to tap into a larger, more diverse talent pool than would otherwise be possible.
Staff Management SMX is TrueBlue's outsourced workforce management division, and one of the largest industrial staffing firms in the United States. For larger companies with a complex labor force, Staff Management uses high-tech metrics to evaluate and improve performance, efficiency, and risk management, while minimizing overtime and turnover.
SMX has proved an especially popular service, for example, among e-commerce clients. As retail warehouse operations have moved away from forklifts and bulk pallets to picking and packing individual items, retailers are always looking for new ways to make the process as efficient as possible. So Staff Management SMX's ability to provide a well-managed workforce for the process gives these companies a significant competitive edge.
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Finally, PeopleScout is the company's division in charge of Recruiting Process Outsourcing and Total Workforce Solutions, and in that capacity handles more hires than any other agency in the world. It operates in 70 countries, and maintains a stellar 20% profit margin. But there's still plenty of room to grow its market share in Europe and Asia, and that is one of the agency's top priorities for the next few years.
Even without any growth in market share, PeopleScout is the leader of a market that's expected to grow at a compound annual growth rate (CAGR) of 12% through 2022, according to research firm NelsonHall.
The whole TrueBlue team, in fact, is operating at the highest level in its various fields and benefiting from a bustling job market.
As we'll see, the stock market has made a major blunder by not taking notice...
Why Now Is the Time to Buy TBI
We mentioned earlier that TrueBlue's annual revenue was $2.5 billion. That's over 150% more than its market cap of $995 million.
That puts TBI in rare territory and suggests that it is severely undervalued.
Now, comparing revenue to market cap can sometimes be misleading. But virtually every metric confirms that TrueBlue is a genuine diamond in the rough.
The company is about to close the year with an expected 30% growth in earnings per share.
Its price/earnings ratio for the next 12 months is 26.5% lower than the industry average. Its price/sales ratio comes in 37% lower than the industry average.
And at 1.7, TBI's price/book ratio is 46% lower than average.
Combine these figures with the consistent, rapid growth in its industry, and TrueBlue's share price should be on its way to double in short order.
That's probably why the board approved a $100 million stock buyback program this year.
Grab it now, while it's still flying under everyone else's radar.
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About the Author
Stephen Mack has been writing about economics and finance since 2011. He contributed material for the best-selling books Aftershock and The Aftershock Investor. He lives in Baltimore, Maryland.