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Obamacare Drives a Bull Market In Staffing Agencies

Thursday, 17 Jan 2013 | 7:23 PM ET
A Play on America's Employment Market
The Affordable Care Act will require companies that employ more than 50 full-time workers will either need to provide their employees with health coverage or pay a penalty. Mad Money host Jim Cramer, weighs in.

A "red hot bull market" is currently being driven by the pending implementation of Obamacare next year, Jim Cramer said Thursday.


Although President Barack Obama signed the health care reform bill into law on March 23, 2010, many of the changes to the health care system won't take effect until 2014. Per the reforms, companies that employ more than 50 full-time workers will either need to provide their employees with costly health care coverage or pay penalties of up to $3,000.

"That's why businesses of all sizes are now searching for ways around the law and the easiest way to avoid paying these expenses is to hire more temps," Cramer said. "Since most temp assignments are just three to four months long, the temp agencies are unlikely to get hit with the full brunt of the law."


Chipotle restaurant
Source: Chipotle.com
Chipotle restaurant

Large or small, Cramer said companies of all sizes will likely try to get around Obamacare by replacing their full-time workforce with temps.

"And even though Obamacare only kicks in starting in 2014, companies need to start making these adjustments now because the law has a 12-month look back or measurement period for the purposes of figuring out how much each company will be on the hook for," he said.

For investors interested in the temporary staffing space, Cramer suggests "best of breed" Robert Half International. The company boasts high gross margins, strong growth opportunities, Cramer said. Its stock currently trades at 19 times earnings with a 20 percent long-term growth rate, beating its competition.

Although Robert Half's stock has had a big run of late, Cramer said "this move has only just begun."

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

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