Business process outsourcing (BPO) and recruitment process outsourcing (RPO) services witness significant demand across different end-use industries, propelling the outsourcing sector’s growth and expansion. Further, numerous technological advancements drive the sector’s prospects.

Considering the industry’s tailwinds, quality outsourcing stocks Randstad N.V. (RANJY), Stantec Inc. (STN), and ZipRecruiter, Inc. (ZIP) could be ideal buys for an accelerated portfolio this month.

The BPO services witness significant demand across end-use industries, including healthcare, IT, communications & media, financial services, and retail in the United States and globally. These services find prominent demand due to vast benefits like enhanced flexibility, reduced costs, and improved service quality.

Moreover, the market enables businesses to refocus on their core business activities to provide incremental value to their customers. According to a report by Grand View Research, the global business process outsourcing market is projected to reach $525.20 billion by 2030, growing at a CAGR of 9.4% during the forecast period (2023-2030).

Meanwhile, the North America business process outsourcing market is expected to grow at a CAGR of 8.9% from 2023 to 2030. The growing focus of several organizations on advanced technologies like cloud computing and AI to drive business efficiency has boosted the adoption of BPO services.

The global IT outsourcing market is projected to expand at a 9.3% CAGR from 2023 to 2031.

Further, the rising demand for affordable and effective recruiting processes, the growing trend of outsourcing recruitment processes to third-party service providers, and the high demand for quality talent across several industries are primary factors driving the recruitment process outsourcing industry’s growth.

RPO service providers offer candidate sourcing, screening, selection, onboarding, and retention services, which assist organizations in streamlining their hiring procedures. Further, providers easily handle the complicated legal and regulatory requirements involved in the hiring process, ensuring that businesses follow all applicable laws and regulations.

The global recruitment process outsourcing market is anticipated to reach $36.07 billion in 2032, expanding at a CAGR of 17% from 2023 to 2032. RPO service providers are increasingly adopting cutting-edge technology, including AI, machine learning, and big data analysis, to enhance the effectiveness of their hiring procedures.

Given these favorable trends, investing in best-performing outsourcing stocks RANJY, STN, and ZIP could be wise in December.

Let’s discuss the fundamentals of these stocks in detail:

Randstad N.V. (RANJY)

Headquartered in Diemen, the Netherlands, RANJY offers solutions in the field of work and human resources (HR). The company provides temporary staffing and permanent placement services for the light industrial, office and administrative, manufacturing and logistics, and other specialty areas.

On November 29, RANJY announced joining the RiseUp with ServiceNow global program. The program will help skill and train individuals in the ServiceNow ecosystem and prepare them for in-demand jobs in technology. This strategic partnership will provide organizations with the talent needed to navigate the era of digital business.

“It is an honor to achieve the RiseUp certification with ServiceNow, marking a notable milestone in our ongoing partnership,” said Venu Lambu, Chief Executive at Randstad Digital.”

RANJY’s revenue and EBITDA have grown at respective CAGRs of 7.7% and 16.8% over the past three years. The company’s EBIT has increased 32.4% over the same timeframe, while its net income and EPS have improved at CAGRs of 41.9% and 43.4%, respectively.

For the third quarter that ended September 20, 2023, RANJY reported revenue of €6.26 billion ($6.81 billion). The company’s adjusted net income amounted to €190 million ($206.70 million), or €1.04 per share, respectively. Its free cash flow grew 15.6% year-over-year to €297 million ($323.10 million).

For the fiscal year ending December 2024, analysts expect the company’s revenue to grow 1.3% from the prior year to $28.59 billion.

RANJY’s stock has gained 18.8% over the past six months and 2.2% over the past year to close the last trading session at $29.80.

RANJY’s robust outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

The stock has an A grade for Value and Stability. Within the A-rated Outsourcing – Staffing Services industry, RANJY is ranked #12 of 20 stocks.

Click here to access additional ratings of RANJY for Growth, Momentum, Quality, and Sentiment.

Stantec Inc. (STN)

Headquartered in Edmonton, Canada, STN offers e-professional services in the areas of infrastructure and facilities to public and private sector clients internationally. The company provides consulting services in engineering, architecture, interior design and surveying and offers clients planning and design consulting services.

On November 29, STN closed its previously announced bought deal public offering of common shares. The company issued 3,108,450 common shares from treasury, including 405,450 shares for the exercise in full of the over-allotment option granted to the Underwriters, at $92.50 per share, for a total gross proceeds of $287,531,625.

STN intends to use the net proceeds towards repaying balances outstanding on its revolving credit facility and creating additional capacity to fund future acquisition opportunities and growth initiatives.

On November 23, SRN announced that it would design a billion-dollar lithium-ion battery cell manufacturing facility for E-One Moli Energy in British Columbia. The facility will become the largest factory in Canada for high-performance lithium-ion battery cells, producing up to 135 million battery cells each year.

“We are honored to work with a socially-conscious partner like E-One Moli who shares Stantec’s commitment to reducing global greenhouse and CO2 levels for a cleaner tomorrow,” said Navid Fereidooni, architect and principal for Stantec.

Also, on November 15, STN announced the acquisition of ZETCON Engineering, a 645-person engineering firm headquartered in Bochum, Germany. ZETCON’s national presence and expertise, combined with STN’s global knowledge and capabilities, will offer opportunities to diversify the business further and grow in other sectors.

In the third quarter ended on September 30, 2023, STN’s net revenue grew 13.5% year-over-year to C$1.32 billion ($975.62 million). The company’s adjusted EBITDA increased 24.8% from the year-ago value to C$241.30 million ($178.78 million). The company’s adjusted net income was C$126.70 million ($93.87 million), up 33.4% from the prior year’s quarter.

Furthermore, the company’s adjusted EPS grew 32.5% year-over-year to C$1.14.  Its contract backlog increased to C$6.40 billion ($4.74 billion) as of September 30, 2023, reflecting 5.5% organic growth from December 31, 2022.

The company’s solid third-quarter performance gives it the confidence to reaffirm its 2023 outlook. STN expects its net revenue growth and adjusted EBITDA to be 12%-14% and 16.7%-17.1%, respectively. And its adjusted net income is expected to grow above 8.2%, compared to the prior guidance of above 7.5%.

The company’s adjusted EPS is now forecasted to rise by 22%-25%, an increase from 12%-15% forecast in its previous guidance.

Analysts expect STN’s revenue and EPS for the fourth quarter (ending December 2023) to increase 8.3% and 4.4% year-over-year to $903.26 million and $0.63, respectively. Also, the company has topped the consensus EPS estimate in all four trailing quarters, which is remarkable.

Shares of STN have surged 28.5% over the past six months and 57.9% year-to-date to close the last trading session at $75.50.

STN’s POWR Ratings reflect its sound fundamentals. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

STN has an A grade for Sentiment and a B for Growth, Momentum, Stability, and Quality. It is ranked #6 out of 40 stocks in the B-rated Outsourcing – Business Services industry.

In addition to the POWR Ratings we’ve stated above, we also have STN ratings for Value. Get all STN ratings here.

ZipRecruiter, Inc. (ZIP)

ZIP operates a marketplace that connects job seekers and employers. The company’s platform is a two-sided marketplace enabling employers to post jobs and access other features, where job seekers can apply for employment with a single click.

On November 2, ZIP launched a new home for its economic research – ZipRecruiter-Research.org. The newly launched site features commentary and analysis on the latest labor market data from its economists’ team and data scientists. It also offers insights from the company’s marketplace data and quarterly surveys.

With its focus on collecting and analyzing comprehensive employment data, the team will deliver insights and encourage informed decision-making. This new launch should bode well for the company.

On August 16, ZIP announced a technology partnership with UKG, a leading HR, payroll, and workforce management solutions provider. This partnership is to support enterprise hiring. With this, ZIP will add another top player to its roster of over 200 available human capital management (HCM) suites and applicant tracking system (ATS) integrations.

During the third quarter that ended September 30, 2023, ZIP reported revenue of $155.63 million. Its income from operations rose 10.8% from the year-ago value to $32.67 million. Also, the company’s net income came in at $24.08 million and $0.23 per share, increases of 17.1% and 35.3% year-over-year, respectively.

In addition, as of September 30, 2023, the company’s cash and cash equivalents came in at $243.34 million versus $227.38 million as of December 31, 2022.

Street expects ZIP’s EPS to grow 10.3% per annum over the next five years. Moreover, the company has an impressive earnings surprise history as it surpassed the consensus EPS estimate in all four trailing quarters.

Over the past month, the stock has gained 28.2% to close the last trading session at $13.52.

ZIP’s POWR Ratings reflect its bright prospects. The stock has an overall grade of B, translating to a Buy in our proprietary rating system.

ZIP has an A grade for Quality. The stock has a B grade for Sentiment. It is ranked #7 among 20 stocks within the A-rated Outsourcing – Staffing Services industry.

To see the other ratings of ZIP for Value, Growth, Momentum, and Stability, click here.Top of Form

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RANJY shares were trading at $29.75 per share on Monday morning, down $0.05 (-0.17%). Year-to-date, RANJY has gained 1.51%, versus a 20.26% rise in the benchmark S&P 500 index during the same period.

About the Author: Mangeet Kaur Bouns

Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions. More...

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