Look for Heavy Lifting From Labor Ready
By John Reese
RealMoney.com Contributor
2/24/2006 8:02 AM EST
This column was originally published on RealMoney on Feb. 23 at 4:06 p.m. EST. It's being republished as a bonus for TheStreet.com readers.
There are times when an employer just needs able-bodied workers -- not necessarily skilled workers, but those able to do a job's heavy lifting, literally and figuratively. But finding unskilled workers on short notice often isn't easy. Addressing this market is Labor Ready (LRW:NYSE - news - research - Cramer's Take).
The largest company in its market, Labor Ready estimates the market for day labor (part of the temporary-staffing services industry) at $5 billion a year. The Tacoma, Wash.-based firm estimates its share to be about 20% of that. A couple of years ago, the General Accounting Office estimated that the day labor industry has doubled in size since 1995. Labor Ready's employees work in such industries as construction, manufacturing, hospitality services, landscaping, warehousing and retail. Its labor force consists of about 600,000 temporary workers.
Size has its advantage: Clients go to Labor Ready because it has a well-known brand name in its industry. When dealing with day labor, having a known company behind the employees gives customers a sense of security and trust. It can also give the company bargaining power when dealing with small customers. Labor Ready has been able to build its brand by covering its markets with its presence. It has more than 880 branches, the vast majority of which are in the U.S., but with some in Canada and the U.K.
The stock currently trades around $25. Two guru strategies I follow, those of Peter Lynch and James P. O'Shaughnessy, indicate that this is a company worth hiring for your portfolio.
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