Michael Brush: 5 companies that are hiring

Company Focus10/26/2010 8:00 PM ET

5 companies that aren't afraid to hire

While many businesses are content to boost profits by cutting back, a select few are confident enough to hire and grow. That makes them promising plays for investors.

[Related content: jobs, Apple, Comcast, Lockheed Martin, Michael Brush]

By Michael Brush

MSN Money

Just about every week, we hear the depressing news that unemployment remains high because few jobs have been created, a trend that seems to suggest stocks are no place to be because growth will remain weak.

How many jobs did the recession kill?

But the big-picture numbers disguise the truth: Many companies are on hiring binges. In this economy, that's a great indicator for investors.

While business profits overall are at record levels, many companies have focused on cutting back and hunkering down. Companies' decisions to hire represent confidence that not only are their bottom lines strong but that their businesses will keep growing. They're not just playing defense.

To me, this means that buying the stocks of companies on hiring binges, such as Apple (AAPL, news, msgs), AT&T (T, news, msgs) and Comcast (CMCSA, news, msgs), makes sense even when those stocks have been going up. Hiring trends also support contrarian buys of defense stocks like Lockheed Martin (LMT, news, msgs) and General Dynamics (GD, news, msgs), which have declined amid uncertainty about defense budget cuts.

So who's hiring?

To find out which companies are doing the most hiring, I asked for help from Indeed.com, a search engine for jobs. Its algorithms normally help job seekers find openings. Indeed.com turned its "algos" loose on the Internet and its own databases to find which companies have the most job postings online right now and over the past three and six months.

Hiring is strongest in three areas: retail, health care and technology. I'm excluding retailers such as J.C. Penney (JCP, news, msgs) and McDonald's (MCD, news, msgs) from my list of possible investments based on hiring trends, for a simple reason: Because turnover is higher on sales floors and at cash registers, these companies are probably always hiring.

In health care, the companies doing the most hiring are names like Kaiser Permanente and HCA -- private businesses we can't invest in. They're off our list, too.

That leaves us with five plays, all in technology, so often the sector that produces growth when everything else looks bleak. Another common factor that ties these five companies together: healthy cash flow. This is a sign that they have good track records and are doing the right thing when taking on the cost of hiring employees. It also means they can hire add workers without going further into debt to do so.

Here are the names:

Apple

It's not hard to figure out why Apple comes up high on the list of companies with the most job postings online right now, with 4,500 ads as of last week, according to Indeed.com. Last quarter, for the first quarter ever, the company posted more than $20 billion in revenue as a record 14.1 million iPhones were sold worldwide, a 91% increase over the year-ago quarter.

Other products are doing great as well, aided by a "halo effect"; people like iPhones so they buy other Apple products. Mac computer sales were up 27%, or more than twice the growth in PC sales, and Apple sold 4.2 million iPads.

Click graphic to see interactive chart

Apple

"This is a company on a major growth trajectory," says Andrew Corn, the chief investment officer of E5A Funds in New York. "It is still my largest position."

Apple's current aggressive search for more employees tells us the company has confidence these trends will continue. This is believable because Apple is expanding distribution into Wal-Mart (WMT, news, msgs), Target (TGT, news, msgs) and Verizon (VZ, news, msgs). Plus more and more companies are offering iPads and iPhones to employees. And while most U.S. cell phone users now have smart phones, in many places abroad this upgrade is still in the early stages. The demand for iPhones "in all countries is absolutely staggering," says Apple's chief operating officer, Tim Cook.

Barclays analyst Ben Reitzes also cites what he calls the "FaceTime networking effect." This means that as Apple's FaceTime video conferencing app spreads to more Apple devices from the iPhone 4 and the iPod Touch, more people will want Apple products so they can make video phone calls.

Apple is probably also hiring to build out its cloud computing, so it can sell notebooks with smaller hard drives and let consumers store data such as iTunes libraries on servers accessed via the Internet.

"The company has been actively building an expensive data center in North Carolina, perhaps to enhance iTunes in this way," says Reitzes. He has a $390 price target on the stock, which recently sold for $310, up 55% in the past year.

MSN Careers: Search for jobs at Apple

AT&T

As the exclusive iPhone vendor in the U.S., AT&T is riding the same trends as Apple. The phone company activated a record 5.2 million iPhones in the third quarter, of which 1.2 million went to new customers. AT&T recently added iPads to its lineup of Apple offerings.

"That is going to make a big difference," says Jim Hardesty of Hardesty Capital Management in Baltimore.

Plus, consumers have been signing up for the company's U-verse TV service at a rapid pace. The number of subscribers increased 50% in the past quarter, compared with a year earlier, to 2.7 million.

Click graphic to see interactive chart

AT&T

All of this -- plus plans to roll out a faster fourth-generation wireless network next year -- means AT&T has to invest heavily in its networks to add capacity, which explains why the company ranks high on the list of companies looking for employees.

"The hiring is part of the infrastructure buildout," says Alan Lancz of Alan B. Lancz & Associates, a money management company. AT&T will probably shell out $19 billion in capital spending this year, including a 55% year-over-year increase in wireless-related spending. AT&T had 8,300 job postings online last week, according to Indeed.com.

One concern is that AT&T is going to lose its status as the exclusive U.S. iPhone vendor soon. But Keith Goddard, a portfolio co-manager for the Capital Advisors Growth Fund (CIAOX), which owns the stock, thinks these fears are overblown. He cites bullish U-verse TV subscriber trends and robust sales of Android phones. Plus, many of AT&T's iPhone users are locked in to multiyear contracts.

"It's is not like you are going to see this massive transition the minute another carrier gets the iPhone," Goddard says.

MSN Careers: Search for jobs at AT&T

Continued: A growing cable company

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13Comments

Newest

11/11/2010 11:12 AM

Everybody's situations are different but unless you are young and just starting out you can not live off what these company's are paying, especially if you are single, and trapped in an adjustable rate mortgage with a lot of debt, with your credit score going down, it's even worse for a family with children.
You may have a masters degree but it's not what you know it's who you know or you will end up being a slave to society.
My advice to younger people is to choose your career path well, Doctors, Lawyers, Dentists will always be in demand and don't even think of starting a family until you have a successful job with good income.

2 0

ACSCounselor

11/08/2010 5:52 PM

Correction: Third, the colleges and universities have not geared the education to the need and why the private sector is thriving. Should read ...private sector schools are thriving.

0 0

ACSCounselor

11/08/2010 5:48 PM

Investment is related to product or service and directly related to the people and contributions to make product development, manufacture, marketing and distribution a reality to bump-up the bottom line. Any time a company goes to public trading, its purpose then becomes a duty to the stock holders to have a return on investment (ROI). Training does cost money but can be worth the investment if the trainer knows what they are doing. Second, schools have taken down the overall education level that makes for a huge shock for entering freshmen. Third, the colleges and universities have not geared the education to the need and why the private sector is thriving. Fourth, there is the never-ending circular logic of how can a person get the job without the experience and get the experience without the job. (Catch 22 for our more mature audience.) Fifth, the screening process is lopsided because of the use of keywords that are too specialized and vary from company to company. Sixth, from managers to human resources managers, they state that it easy to find technically competent candidates but most do not have the interpersonal skills. This is easily explainable in the technical professions because it takes 15% to 20% more hours for the same degree and the courses are much tougher and require an average of five years to complete. Finally, with all the training required initially and then heavy creativity demands, after projects are finished, these highly trained persons are then thrown on the unemployment heap. I have been there and done that as they say. Technology, Educator, Trainer, Counselor, Workforce Boards, Business Owner

0 0

NHYankee

11/07/2010 1:17 PM

Brush chooses two defense contractors over retail stocks and McDonalds? I worked for a small defense contractor in the 80's and found that it's a great job until the contract ends. Then, you're back out on the street until you find another contractor with a slot that matches your skill set. Given the current administration and the fact that the Senate is still dominated by the Democrats, I doubt that the situation will improve in spite of the author's "contrarian" position.

I've worked in retail for six years and find that there are a wide variety of positions in the company even in a state as small as NH. So, my advice is to look at retail as a business that is here to stay. People need stuff; everything from toilet paper to DVDs. Although the profit margins are very tight, it encourages companies to be creative in how they run their business and adapt to tough economic times.

0 0

wordfrominside

10/28/2010 6:30 PM

diditonce

Training costs money. Depending on your field, it can cost anywhere from thousands to tens of thousands. The fact that companies don't train their people is the reason that service levels are so bad and why we are falling behind nations where they DO train their people. American companies don't think of this as an investment; they only think of it as a cost. That is short-sighted.

As for the moving part, it depends where you are moving from and where you are moving to. If you are in a lower cost area of the country, why would you want to move to a higher cost area (companies rarely make up for the higher cost of living these days)? For some people who are in the badly hit parts of the country from the real estate bust, they may not be able to sell their homes so they are stuck. Not to mention people also have spouses who would need to find a job as well if they moved.

It is simplistic mouthing off like this that is the reason why this country is in such trouble. The lack of foresight that led to the financial crisis and the lack of flexibility/support for getting the nation out of the current situation is just incredible.

0 0

by choice

10/28/2010 11:15 AM

Hiring is better than not hiring, but what kind of position the new hires are for is important sign of how well a company does, too.

1 0

Luis305

10/27/2010 5:25 PM

If we want jobs we have to fight for them and vote for tougher regulations and work with other countries to do the same so that these big companies will stop abusing their powers just to make a higher profit. But then again I guess it's easier to just blame everything on the immigrants .

0 1

retired-nc

10/27/2010 2:03 PM

If you're not afraid to invest either as a company or as an individual at this time you can do well. What is Warren Buffets philosophy?

0 1

LostOnEarth

10/27/2010 11:16 AM

Maybe you should apply for one of those jobs Mr. Brush, even though I doubt anyone would hire you based on your current underperforming and nonsensical work performance. Get a clue!

3 0

Foodheadhunter

10/27/2010 9:53 AM

Want to create jobs. Enforce the law ! There are over 3000 food and beverage manufacturing plants plus an additional 5000 distribution companies. The industry employs tens of thousands of "immigrants" who claim to be eligible for employment. I deal with these company's on a daily basis. Most of them have a hard time finding people to work for $12-14 dollars per hour. Who takes these jobs, mostly Mexican nationals with good fake documents. Eradicate the illegal's out of these operations and tens of thousands of people who are true us citizens could take care of their families

PLUS, is it not about time to revoke all foreign work visas? We have a couple of million foreign workers here on visas taking up american jobs. I would think in this economic crisis, our government would govern and place the interests of American Citizens first and place a moratorium on foreign nationals here on work visas.

9 2

Someone (diditonce)

10/27/2010 9:05 AM

Cniht.......you are correct. With the current job situation companies are free to hire people who are able to hit the ground running. In short what they want and are getting is new employees who are able to start making them money with the least amount of investment in training. The second point you mentioned is wiliness to relocate. I am shocked at the number of people I know that have turned down jobs because they weren't willing to relocate.

2 0

Cniht

10/27/2010 8:43 AM

It may be helpful when talking about companies that are hiring to include companies who are hiring people with a skill set that matches most out of work Americans.

These companies are probably not open to training employees, so that means they have to be at least half ready made with Tech Schools or Colleges. That's not the people out of work. The people out of work is who we have to address. Also these companies are hiring in very specific areas in all likelihood. That won't assist the people NOT living close by unless they are willing to move. Is the company even willing to take a person who will relocate? Or, like most businesses, are probably planning their projects in areas where the local population meets their labor needs.

This story is just fluffing up imaginary space online and doesn't appear to serve a practical purpose.

5 0

Lynn X

10/26/2010 11:57 PM

I already knew Apple was a great stock to be in. It has made more money for me than any other stock I have owned. Verizon and General Dynamics are not bad either.

1 5

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Company Focus10/26/2010 8:00 PM ET

5 companies that aren't afraid to hire

So who's hiring?

Apple

Click graphic to see interactive chart

Apple

AT&T

Click graphic to see interactive chart

AT&T

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