Look out Kelly Services, Inc. (NASDAQ:KELYA), and step aside ManpowerGroup Inc. (NYSE:MAN). A young company called Staffing 360 Solutions Inc. (OTCBB:STAF) is coming up fast in your rear-view mirror, and is poised to dominate the fastest growing arena of the temporary staffing world.
The staffing business in the United States is curious. As is the case with most industries, there are bigger players and there are smaller players. The "bigs" in the staffing arena like ManpowerGroup and Kelly Services don't collectively dominate the market the way we see the top two soda firms collectively dominate the soda market, or the way only two organizations collectively own the bulk of the domestic telecom market. In the United States, the biggest 50 staffing firms only collectively control 40% of the market, while the other 32,000 or so (and no, that wasn't a misprint) control the other 60% of the domestic $220 billion (no, that wasn't a misprint either) market. That fragmentation alone represents opportunity for someone to unite several smaller players into one larger player and take on - perhaps even exceed - the larger names like Kelly Services, Inc. or ManpowerGroup Inc. And yes, Staffing 360 Solutions is the best-suited name to do so.
A year ago, Staffing 360 Solutions didn't actually exist in the form we know today. The company's initial revenue was created via an acquisition of a company called Cyber 360 Solutions in May of 2013. It was a good pickup, driving quarterly revenue of a little less than $2 million. It was only the beginning of what's going to be a wave of acquisitions, however. Between November of last year and now, STAF has acquired four more companies to its family, and through them drove $16.9 million in revenue for the first fiscal quarter of 2014.
Staffing 360 Solutions isn't stopping there, however. With more planned acquisitions, STAF expects to be generating sales at an annualized pace of more than $100 million. That's not going to be the end of the growth spurt either though. All told, STAF has its eye on 15 more companies it would like to buy over the course of the next couple of years. Combined, these 20 or so organizations should be driving $300 million in annual sales once all under the same roof and working together, synergizing.
That being said, it may not be generalists like ManpowerGroup or Kelly Services that have the most to worry about just yet with the advent of Staffing 360 Solutions. MAN generated a little more than $20 billion in revenue over the past twelve months, while KELYA drove $5.4 billion. The biggest threat STAF poses is to temporary staffing firms or placement firms that specialize in IT staffing, or in cybersecurity staffing in particular. See, Staffing 360 Solutions Inc. specializes in that arena too, and by explicitly seeking out the off-the-radar niche players in the space is quietly, surprisingly building an army that could take on most any others. Case in point: The initial acquisition of Cyber 360 Solutions gave the company a foothold in the cybersecurity game, while yesterday's announcement that it has acquired IT consultants and staffing form PeopleSERVE.
It's no accident that STAF is focused on the IT sector either. That's where the bulk of the job growth for the foreseeable future is going to be.
The forecasts vary slightly from one observer to the next, but the general consensus is, globally, we're more than 300,000 people short of the total number of cybersecurity specialists we need; we can't train them fast enough. The Bureau of Labor Statistics offers a comparable number for the United States, suggesting the number of information security specialists this nation is going to need by 2018 is 53% greater than the number we have right now. No matter which outlook you're looking at though, all of them say the job growth rates for the IT sector - and the cybersecurity arena in particular - are going to be greater than for any other industry for the same foreseeable timeframe.
In other words, Staffing 360 Solutions is right where it wants to be.
For investors, the most exciting aspect of STAF is that its growth plans aren't just plans anymore. The company is now moving towards the end zone, yet the market has barely even heard of the organization yet. That's advantageous, as it allow newcomers to get into a position at ground-floor stock prices.
Investors interested in learning more about Staffing 360 Solutions can visit the company's website here. It's got several investor-centric publications available.
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