• November 30, 2022

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Organizations That Maintain Trust In 2023 Will Thrive

The 2020s are off to a tumultuous start. Individuals have experienced extraordinary political and social upheaval, war on the European continent, the reemergence of infectious diseases, financial instability, scandals, and extreme …

We continue to find value in all market-cap strata, but smaller-cap stocks with reasonable price metrics and generous dividend yields have been largely left behind in recent years. That’s an anomaly for many reasons, especially considering the terrific long-term performance for Small Value stocks (in Figure 1). In addition to some of our more-recent newsletter picks being of the small-cap variety, we have a SMiD strategy to better appreciate this area.



, a premier global staffing firm with broad reach and extensive job networks, is geared towards the European market, where it generates two thirds of its revenue. The region has struggled as effects from the war in Ukraine ripple throughout the Continent. The Wall of Worry is not new for Manpower
, which has managed through many crises during its 70-plus-year history.

Shares rose almost 7% a week ago despite reporting financial results a touch lighter than the Street’s target, brushing off likely expectations that heavy exposure to Europe would weigh even more than it did. Revenue of $4.8 billion in Q3 was approximately 2% shy of the consensus analyst estimate, while adjusted EPS of $2.13 was $0.05 below forecasts. But MAN’s top-two higher-value brands (Talent Solutions and Experis) saw significant revenue growth of 10% and 5%, respectively, as permanent hiring and IT recruiting continues to be in high demand by employers.


The company’s services shoukd prove valuable whichever course the global economy takes. Indeed, a persistently tight labor market might require flexible staffing solutions. On the other hand, companies may also rely on MAN should they need to downsize or rehire.

The 32% pullback from the highs this year broadens the stock’s appeal, as earnings are expected to breach $10 per share by 2025, up from $7.24 in 2021. MAN’s solid financial footing has allowed it to continue making acquisitions, paying dividends and repurchasing shares. Indeed, the firm spent $85 million to buy back its shares in the latest quarter and retire $50 million of debt related to the Experis acquisition. The next dividend payment, which is paid twice per year, is expected in December and the yield is 3.6%.


Those interested in micro-cap stocks might appreciate Hurco Companies (HURC), primarily a maker of computerized machine tools, as it receives no coverage from Wall Street analysts. The firm generates over 80% of its revenue from this effort, with the balance from a combination of systems & software and service parts & fees.

With more than half of revenue coming from Europe, it’s no major surprise that investors have turned sour on shares given the firm’s substantial exposure to the Continent (roughly half of revenue). But operating performance has been on the mend following the Pandemic.

The machine tool industry is highly cyclical and the latest economic weakness across the globe will undoubtedly impact demand for Hurco’s products. But like Manpower, HURC has endured many challenges since its founding in 1968, perhaps due to its conservative fiscal posture.

Indeed, the balance sheet is in terrific shape with over $74 billion of cash with no debt, providing plenty of dry powder for bolt-on acquisitions or spending on new product design. It also maintains plenty of coverage to implement the share repurchase program approved by the Board in 2021 for up to $7.0 million. Yes $7 million is modest, but the market cap is just $157 million and the 19% decline for the shares this year ought to make incremental buybacks more potent.


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