U.S. productivity slowed in the fourth quarter of 2006 and labor costs were on the rise. Nonfarm productivity increased only 1.6% the last quarter of 2006, significantly down from the original estimate of 3%. Unit labor costs increased 6.6% in the last quarter, significantly up from previous estimates of 1.7%.
This bodes well for the temporary staffing industry. As the labor market tightens and labor costs rise, companies will shift to staffing with more temporary labor. And when the economy slows down, as it always does, temporary staffing will allow companies to more easily reduce their workforces.
Kforce (KFRC) is one of the smaller companies in the temporary staffing market segment but over the course of the last few years Kforce has gone on an acquisition spree gobbling up several of the smaller temporary staffing players. Founded as Romac & Associates in 1966. The company changed its name to Kforce in 1999.
Kforce provides contract and permanent staffing solutions in the specialty skill areas of finance and accounting, information technology, health care, clinical research, scientific, title and escrow, mortgage, and banking and credit union.
Competitors:
Competitors for KFRC include: Adecco SA (ADO), MPS Group Inc. (MPS), Robert Half International Inc. (RHI), Monster Worldwide Inc. (MNST), and Ventiv Health Inc. (VTIV).
With U.S. productivity waning and the labor market tightening, the prospects for Kforce are looking bullish. Using PowerOptions powerful stock options search tools, we found the following attractive covered calls stock options position for Kforce:
| SmartSearchXL covered call search | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Sym |
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%Dnsd. Prot |
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| KFRC | 12.68 (-0.04) | QFDDV | 07 APR 12.5 (46) | 0.8 | 6.3 | 5.2 | 5.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The covered calls position for KFRC has a potential return of 5.2% (46 days) if the stock price remains unchanged or has risen at stock options expiration in April of 2007. The position has downside protection of 6.3%.
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[tags] KFRC, Kforce Inc., MNST, Monster Worldwide Inc., MPS, MPS Group Inc., RHI, Robert Half International Inc., VTIV, Ventiv Health Inc., covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options [/tags]