Kelly Services Shares Popped Again: What You Need to Know


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Well, so much for that idea. Yesterday, I told you how investors quite logically bid up Kelly Services (NAS: KELYA) in response to strong earnings ... then irrationally sold the stock back off to just about where it was before earnings again. I urged you to buy the stock quickly before Mr. Market came to his senses. And now he has. Kelly shares rocketed 13% this morning.

So what: Between a return of optimism in the stock market generally, and news that unemployment claims figures are improving in the U.S., it seems investors feel they've received renewed permission to reward Kelly's good news today.

Now what: Yesterday, I said Kelly was cheap at 11 times earnings with just a skosh higher price-to-free cash flow ratio. Today, the stock's selling for something closer to 13 times both earnings and free cash flow. It's still cheap based on consensus growth forecasts of 15% -- just not quite as cheap as yesterday.

Want to see how Kelly's growth thesis plays out?Add it to your Fool Watchlist.

At the time thisarticle was published Fool contributorRich Smithdoes not own (or short) shares of any stock named above. The Motley Fool has adisclosure policy. Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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