Manpower, Robert Half International Up

Many staffing companies are cyclical and tend to fare better in a stronger economy. As a number of economists predict moderating economic and employment growth, it is likely that the domestic staffing industry may suffer.

Lehman Brothers analyst Gary Bisbee, who initiated coverage of both companies, said Manpower is strongly leveraged to robust European labor markets and isn't as exposed to a possible slowdown in the U.S. employment market.

Manpower's fourth-quarter profit surged 85 percent on growth in overseas markets, while the U.S. market was relatively flat. The sluggish domestic results were offset by gains in Europe, such as France, where revenue rose 16.7 percent.

Meanwhile, Robert Half International is poised to gain because it operates in the specialty staffing arena, which encompasses higher-skilled workers within the services industry.

"Specialty staffing is projected to grow more rapidly than commercial staffing, and staffing firms generally earn higher margins from specialty operations since they provide more skilled personnel (and thus are able to charge more for their services)," Bisbee wrote.

Bisbee initiated coverage of Robert Half International with an "Equal Weight" rating and a $41 price target and Manpower with an "Overweight" rating and an $82 price target.

Manpower rose $1.33 to $74.58, and Robert Half International rose 36 cents to $38.73, both on the New York Stock Exchange.