May 8, 2012 PSW Staff |
For the average investor, though, these methods usually do not result in a quick buck. General Employment Enterprises Inc. (JOB) is a stock that may offer those looking to invest in the jobs market a great opportunity to double or triple their money in a relatively short period of time without risking much capital. General Employment Enterprises, Inc. provides contract and placement staffing services for business and industry, primarily specializing in the placement of information technology, engineering, agricultural and accounting professionals. It also provides labor and human resource solutions, including temporary staffing, human resources and payroll outsourcing services, labor and employment consulting and workforce solutions. General Employment Enterprises is a fairly small company with 20,449,675 shares outstanding. 76% of the shares are owned by insiders leaving a tiny float of just under 4 million shares. Only about half a percent of the float is held short so despite very light volume in this stock, shorts would only need less than 2 days to cover all of the open positions. A slight increase in volume beginning late last year thanks to improving unemployment numbers caused the stock price to more than double. Volume has since tailed off, and the price has dropped a little bit. Given some very solid profitability and a large increase in revenue due to acquisitions of late, some stability in the stock price could allow for some reduced risk for anyone looking to get in now while the unemployment picture is looking weak again, and waiting for better numbers to come out in the later half of the year. This seems like a strong possibility given that the two recent months that have caused all of the panic are still showing well north of 100,000 new jobs added a month. The Company’s professional staffing services business is highly dependent on national employment trends in general and on the demand for professional staff in particular. As an indicator of employment conditions, the national unemployment rate was 8.5% in December 2011 and 9.4% in December 2010. Management has implemented a strategy which included cost reduction efforts as well as identifying strategic acquisitions to improve the overall profitability and cash flows of the Company which will pay big dividends should the unemployment rate continue to decline. During the company's most recent quarter, net revenues increased $6,808,000 or 114.0% from the same period last year primarily due to acquisitions. Net income was $23 thousand compared with $15 thousand in the same period in 2010, a small profit no matter how you slice it, but it shows consistency with a lot of potential for the short to mid term future. We would look to pick up this stock with perhaps an even smaller amount of capital one would normally use for penny stocks, especially given the stock is listed and below a dollar, and sees very light trading volume. We would look for $0.50 as a starting point with a stop loss at around $0.25. A profit target would make sense anywhere from $1.00 to $1.50 with a two to three month time horizon. |
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