Markets

These Top Stocks Can Keep Growing Despite the Labor Shortage

The labor shortage is impacting both small and large businesses, but certain sectors may be naturally inclined to ride out this period that has been termed "The Great Resignation" with more tailwinds than others.

In this segment of Backstage Pass, recorded on Oct. 15, Fool contributors Toby Bordelon, Rachel Warren, and Trevor Jennewine respond to a member's question and discuss some well-known companies that could actually benefit from the changing workforce.

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Toby Bordelon: We have about 15 more minutes here. Let's do this, let's address a couple of questions first if we can before we move to our last couple questions. Do any of you have any thoughts on Sprout at all? Do you follow that company? I don't really figure SPP from Bill Johnson. Are you following Trevor?

Trevor Jennewine: I don't, but on our Clubhouse chats, I believe Ryan Henderson has talked about it quite a bit. I'm just guessing here, but I think if you Google Motley Fool and Ryan Henderson, that you'd probably find some articles about Sprout. At least there's a reference for you.

Toby Bordelon: Check that out, Bill, Ryan Henderson itwas. Ryan says, asks "What companies will benefit from the labor shortage and potential start of elevated wage inflation?" He throws out a couple of interesting ideas. Upwork, ZipRecruiter, Fiverr and then companies like Apple, Peloton, Lumen, or homebuilders even, are you guys any one company that come to mind.

If you say, if we're going to have wage inflation, if it's going to cost more to hire people, is there a company you could point to, to say you're going to benefit from this?

Rachel Warren: I'll take this one first. I was just looking at the question, it's a great question, Ryan. I think companies like Upwork and Fiverr could really benefit from this. Because even though there's a labor shortage, you're still seeing this huge increase in the gig economy and the freelancer market.

One of the benefits of that specific area of the labor market is a lot of those overhead costs that a company would acquire were they to hire the actual employee or bring them on-site are just aren't an issue because maybe you're working with a freelancer for a specific gig and then you're done. On the freelancer side, they have a lot of pricing power.

Obviously you want to price your gigs to remain competitive, but there's still a lot of room for freelancers to set their fees and really pursue what they feel they're worth those services they are providing, whether it's writing or whatever the case maybe. One of the many causes of the labor shortage we're seeing right now is really workers being very clear about what they want from employers.

Some of those things that they can potentially find, in maybe contractor/freelance roles. Some of those platforms personally could really benefit in the near-term and long-term from the trends we're seeing.

Toby Bordelon: It makes sense. Trevor any company jumped at you or?

Trevor Jennewine: No. I think I agree with everything that Rachel said, I think that makes sense.

Toby Bordelon: For me I would think maybe a company like Apple. Look at these companies, I think you might see some SaaS company potentially benefit in terms of you want to look for a company that is not labor-intensive, that can afford to pay more for top talent, but doesn't actually need a whole lot of people to do what they are doing. I assume they're are hard to identify, but I think if you look at some of these tech companies like Apple or even Microsoft, I don't think they're going to be hurt by it, I guess it's the way to say that.

I don't think they specifically benefit, but I don't think they're going to be hurt by it. I don't know how long it will last. That's the world we're operating in, and that's the world companies are just going to have to deal with, we're going to see in the future. Good ones are going to adapt and this is a chance I think for us to see in some cases, one of the management team is any good. Wherever they can navigate this environment.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Rachel Warren owns shares of Alphabet (A shares) and Apple. Toby Bordelon owns shares of Alphabet (A shares), Apple, and Microsoft. Trevor Jennewine owns shares of Fiverr International. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, Fiverr International, Microsoft, Peloton Interactive, and Sprout Social. The Motley Fool recommends Upwork and recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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