There’s a number that came out [Friday] morning that I want you to ignore.
According to Labor Department figures, the number of workers on U.S. payrolls declined last month for the first time since 2010. Payrolls fell 33,000 (this after the experts had estimated they would rise by 80,000).
But like I said, I want you to forget about this – put it out of your mind.
That’s because almost all these drops can be pinned on Hurricanes Harvey and Irma – and I can pretty much guarantee that these storms’ effects will be short-lived.
In fact, rebuilding should improve hiring at least for the next several months.
And that’s on top of the strong performance we’ve seen lately. The U.S. Commerce Department just confirmed that GDP grew by 3.1% in the second quarter.
That’s the strongest showing since early 2015 and well above the roughly 2.4% average of the last several years.
That’s good news for just about all of the companies and investments I tell you about here.
But there’s also a specific way that savvy tech investors like you can profit from our improving economy – and the quick rebound in job growth we’ll see shortly.
This tech company is growing at 40% a year – and will keep making its investors lots of money for years to come.
And I’m revealing it here for the first time.
From Tepid to Red-Hot – in Less Than a Year
Make no mistake, the U.S. economy under President Donald Trump is showing a lot of strength after several years of tepid recovery.
On Oct. 2, Institute for Supply Management said that its index of manufacturing activity jumped to a 13-year high of 60.8, beating forecasts along the way. A rate above 50 signals growth, and Wall Street had expected it to come in at 58.
That same day, the Atlanta Federal Reserve boosted its outlook for third-quarter growth by roughly 20%. The agency had been forecasting a rate of 2.3% but raised that to 2.75%.
And the Atlanta Fed’s new forecast shows a big jump for consumer spending this quarter. That was originally predicted to be 1.8% larger than a year ago but economists now expect it to be more than 25% higher, at 2.3%.
Here’s the thing. All those new jobs signal a strong economy eight years into the recovery.
Now, here’s why we’re interested in all those new workers – today.
All those new workers require employers to go through a wide range of steps to integrate them. Each of these new hires will need personnel files, training, tax forms, health benefits, overtime sheets, 401(k) plans, etc., etc., etc.
For human resources departments, integrating all those forms and tracking systems can cost many hours and thousands of dollars for each new worker.
No wonder then that human capital management (HCM) technology leader Workday Inc. (Nasdaq: WDAY) is on the rise – and about to really take off…
The Tech Kings of the HR Office
David Duffield and Aneel Bushri are legends in the HR tech field.
They built PeopleSoft Inc. into a tech powerhouse in the 1990s, and then sold their firm to Oracle Corp. (Nasdaq: ORCL) in 2004 for a cool $10.4 billion.
A year later, they founded Workday on a simple premise. Instead of building yet another massive software application that would need to tie into a firm’s legacy enterprise platform, they designed a ground-up software as a service (SaaS), residing in the cloud, that could tackle all of the challenges an HR office faces.
At the time, the traditional HR management software platforms were having a hard time keeping up with the explosive growth in data that firms generate. Troubleshooting and debugging these programs was becoming a drain on IT managers’ time.
Duffield and Bushri knew that an external cloud-based approach would simplify IT needs and remove the need to worry about software integration.
The Gartner Group says the HCM market is growing 8.4% a year, and will be worth $12.6 billion by 2019.
But Workday is swimming in an even larger pool. Beyond primary HR office needs, it offers modules for financial management, recruiting, and Big Data analytics, among others. That moves Workday into a larger field known as “enterprise resource planning” (ERP), a market Gartner values at $27 billion.
Back in 2010, Workday had 160 clients. That tally now exceeds 1,000. The firm is currently eyeing the roughly 23,000 large-scale ERP and HCM clients, most of which are serviced products from Oracle and/or SAP SE (NYSE: SAP).
Sales are taking off as well. They stood at less than $500 million in 2014, but should hit $2.6 billion by next year.
But Workday isn’t calling it quits yet.
In fact, you can count on more market-expanding – and share price-boosting – product rollouts in the next 12 to 18 months…
Signing Up Wal-Mart, Amazon, and More
With its robust offerings, Workday has attracted an impressive client list. Wal-Mart Stores Inc. (NYSE: WMT), the world’s largest retailer, is one recent new client win.
The firm signed up for Workday’s HCM, recruiting, and planning modules this past January.
That deployment is five times larger than any contract Workday has made before.
This one deal alone may represent $100 million to $200 million in yearly billings, according to analysts at Drexel Hamilton.
Just a few months earlier, Amazon.com Inc. (Nasdaq: AMZN) signed up for Workday’s full suite of HCM tools to help manage a global workforce of more than 300,000 (with plans to add another 100,000 over the next 18 months).
Netflix Inc. (Nasdaq: NFLX) uses many of Workday’s modules.
And newly added clients in the second quarter include Citigroup (NYSE: C), Nordstrom Inc. (NYSE: JWN), Qualcomm Inc. (Nasdaq: QCOM), and Humana Inc. (NYSE: HUM).
Speaking of killer client lists, in its most recent quarterly report, Workday noted an impressive milestone…
Fully 30% of the Fortune 500 uses at least a few of its software modules.
More Growth Ahead
In that report, Workday also reported a sharp 41% spike in revenue to $525.3 million. Quarterly profits rose sharply and were 60% ahead of forecasts.
In fact, adjusted earnings were more than 600% higher than year ago levels, as operating leverage starts to really kick in.
And the firm’s global expansion is building speed. More than 20% of sales were derived outside the United States this past quarter, a company record.
The stock opened [Friday] morning with a share price of $106.70 and a market cap of $22.48 billion. Those numbers are ready to take some big leaps as Workday is about to benefit from some big catalysts – “triggers.”
As I said, the job market remains in an uptrend. That makes powerful, easy-to-use HR management tech tools all the more important, especially when it comes to staff retention.
Plus, it’s clear to a growing roster of top-tier firms – Wal-Mart, Amazon, and more – that Workday’s cloud-based HCM tools are what they need to run their entire HR units efficiently.
Those are “triggers” that Workday’s visionary founders spotted early on.
Now you’re seeing them, too.
The road to wealth is paved by tech.
And that means Workday is a stock you want in your portfolio.
Get in now – before that unemployment number starts getting better again.
— Michael Robinson
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Source: Money Morning