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'Hire' Performance by Our Top Employment Services Pick

We think these higher-quality names will outperform the rest.

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For the vast majority of local newspapers, the help wanted section has shrunk to a tiny fraction of what it was just two years ago. During this "Great Recession," the employment market has reached a weakened state not seen since the early years of the Reagan administration. Monthly job loses have averaged in the hundreds of thousands, and the unemployment rate is poised to break the psychologically important 10% mark. Also, the majority of economists do not expect job loses to cease until early to mid-2010. Even with the plethora of negative news, we believe there may be a slight glimmer of hope. We have seen a marked improvement in the pace of month-to-month sequential employment losses for almost all major economic sectors. Other data series and anecdotal evidence we watch closely also point to the beginnings of a recovery for the employment market. However, caution should be taken when viewing these positive signs as the situation remains very precarious, and we do not expect any significant job growth until the middle of 2010.

Given the many moving parts to this story, how does an investor make sense of the disorderly information and pick the best-performing employment-related stocks? In this article we plan to discuss some of the trends we are currently seeing and what stocks we strongly believe will provide investors with outsized returns over the long term.

Vishnu Lekraj does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.