With the job market sucking wind big-time, the temporary worker space now represents a strong growth opportunity. Resources Connection (RECN), based in Irvine, Calif., offers an intriguing play in this arena. Through its Resources Global Professionals operation, the company provides experienced temporary consultants to some of the country’s most successful companies. Its workers are top-level professionals with 20 years or more of experience in all areas of business.
That includes finance, technology, marketing, and law. Resources Connection hires its 2,800 workers on a consultancy basis, paying them an hourly wage. So it is able to keep compensation costs under control.
In fiscal 2010, Resources Connection provided staffers to 83 companies in the Fortune 100, and its 50 biggest customers utilized at least two of the company’s service areas, according to Morningstar data. It’s no wonder then that Resources Connection has generated an average return of 32 percent on invested capital over the last decade.
Resources Connection certainly suffered from the recession as companies delayed big projects, but the tide seems to be turning.
Strength in numbers
The company reported a profit of $753,000 in its fiscal third quarter ended Feb. 26, reversing a loss of $5 million in the year-earlier quarter. Revenue climbed 9.8 percent to $137.6 million.
Strong performance overseas compensated for the company’s rising costs. "All of our geographies continue to grow year over year, led by Asia Pacific at 61 percent,” Tony Cherbak, Resources Connection’s chief operating officer, said in a statement. “Europe grew 9.5 percent and North America 6.7 percent.”
The company now has registered four straight quarters of profit. Its 2009 purchase of Sitrick & Co., a public-relations firm which specializes in serving companies hit by scandal, has proven to be a wise one.
The average recommendation of 11 analysts tracked by Thomson/First Call for Resources Connection’s stock is buy.
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