Not all big investment returns come from tech stocks.
Real Money columnist Paul Price favors well-researched companies with strong businesses and clear trading cycles that simultaneously lower risk, while boosting returns.
“Some stocks are made to trade," Price wrote recently on Real Money. "Workforce solutions provider ManpowerGroup is one of them.”
ManpowerGroup (MAN) describes itself as providing “workforce solutions, connecting human potential to the power of business.” In layman’s terms this means that the company helps businesses find staff. They work at just about every level, from temporary workers to professionals and consultants, and are one of the largest staffing firms in the world.
This kind of size generally comes with a lot of stability, and ManpowerGroup has been no different in this regard.
“The firm's long-term performance has been steady across all major business metrics,” Price wrote. Metrics such as revenue, cash flow, sales and even shareholder dividends have all ticked upward at a steady, comfortable rate.
This makes MAN a good stock to own, but not necessarily a good one to buy. With a visibly strong, well-performing company, share prices are usually equivalently strong. ManpowerGroup is no exception, having increased in price from $56.72 to $93.97 per share over a roughly 10-year period. Yet Price has his eye on this stock as a good trade.
Why?
“Since June 2012, there have been five major cyclical upturns in the shares and five cyclical declines. The asymmetric nature of stock trading, though, was proven once again during each of those fluctuations."
Price noted that "the average decline was (-42.4%) and lasted about 10.6-months. The average rebound from the previous low was +119% over around 14.4-months… Anytime a stock gives me almost 3 to 1 reward versus risk, I'm a happy man. Better still, there were plenty of warning signs available to avoid owning Manpower at its high points.”
