3 Stocks That Could See Rising Demand Based on Latest Jobs Data

Key Points

• The latest jobs data show which industries are cutting back, and which are hiring like there's no tomorrow.
• Increased hiring can be a sign that company are preparing for higher future demand.
• These three stocks are in sub-industries that saw some of the biggest increases in employment in August, and compare favorably versus peers.

Looking into jobs data isn’t just useful for understanding how strong the general economy is. It can also provide insight into what types of companies might be preparing for increases in the demand for their products and services.

Based on this, the data can provide early indications of which firms’ revenues might increase unexpectedly, causing their stock prices to rise. I’ll look at three companies are three different sub-industries where employment has increased drastically over the past month and could see this effect.

As a note, the industry and sub-industry data provided by the Bureau of Labor Statistics (BLS) for this analysis do not fit perfectly with the Global Industry Classification Standard (GICS) used to categorize stocks. Some industry descriptions may sound unusual.

Engineering the Future

First on the list is AtkinsRealis OTCMKTS: SNCAF. Looking into the jobs data, over the last month, the construction industry saw the largest percentage change in employment of any industry the BLS compiles data for. Employment increased by 0.4%, adding 34,000 jobs.

It’s possible to drill down further into the data to see what part of that industry the most growth is coming from. On a more granular level, the heavy and civil engineering construction sub-industry saw the largest percentage growth in employment at 1.2%, adding 14,000 jobs.

That’s where AtkinsRealis comes in. The company engages in civil engineering and construction projects. For example, the company is currently working on the Neom Infrastructure Project in Saudi Arabia. This revolutionary project will build a 170-kilometer-long “linear city” connected solely by high-speed rail where no cars will be present. It is designed to be completely carbon-neutral, an endeavor AtkinsRealis is playing a big part in.

Looking at other details aside from this groundbreaking project, AtkinsRealis looks attractive. The average price target for the firm implies a 37% upside from the current level, and its forward price-to-earnings (P/E) ratio is lower than its peer group.

Among firms in its industry with at least a $5 billion market cap, its forward P/E of 17x is 16% lower than the average. This is despite the fact that its estimated year-over-year earnings per share (EPS) growth of 22% is higher than the average.

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All the Employees Aboard

Next up is Carnival Corporation NYSE: CCL, a well-known cruise line company. Diving into the recent jobs data, the sub-industry that had the largest percentage growth in employment in August was scenic and sightseeing transportation. The sub-industry saw employment grow by 1.7%. However, since it is relatively small in the first place, only 600 jobs were added.

Exploring the company on other metrics, we see it compares favorably. The implied upside of the firm based on Wall Street forecasts is the highest of its cruise line counterparts at 37%. Its forward P/E ratio of 12x is also 12% lower than the average of the group. Additionally, its expected 71% increase in EPS over the next year is no slouch.

Despite fears about an economic slowdown, Carnival raised its full-year adjusted EPS guidance last quarter to a level 21% higher than expected. For 2025, the company has reported record book volume. This helps ease concerns when it comes to currently weak consumer sentiment. People book these trips very far out and will only cancel if they really think the economy has taken a turn for the worse.

 Are Employees Getting in the Zone, Literally?

Last on the list is AutoZone NYSE: AZO. The country’s second biggest retail auto parts company could see a boost in demand as hiring in the retail automotive parts, accessories, and tires sub-industry saw a 0.6% jump in employment last month. That equates to the sub-industry adding 3,800 workers.

The company trades slightly below the average forward P/E in a peer group of five auto parts companies that includes O’Reilly NASDAQ: ORLY, Advance Auto Parts NYSE: AAP, Genuine Parts NYSE: GPC, and Monro NASDAQ: MNRO. Yet it has maybe the best fundamentals. Its operating margin is nearly double that of the group average, and its forecasted year-over-year EPS growth ranks second highest.

The company is also a cash cow. It’s bringing in $25.34 in free cash flow per share, twice as much as the next closest peer in that group. This shows its strong ability to reinvest in the business and return value to shareholders.