Stock market crashes are an opportune time to buy. High quality companies, such as 51job, Inc., are impacted by general market panic and sell-off, but the fundamentals of these companies stay the same. In other words, now is the time to buy strong, well-proven stocks at an attractive discount.
51job, Inc., through its subsidiaries, provides integrated human resource services in the People’s Republic of China. Started in 1998, and led by CEO Rick Yan, the company size now stands at 7.86k people and with the company’s market cap sitting at US$4.1b, it falls under the mid-cap group. Bear market volatility can have a short-term impact on large, well-established companies, but in the long-run, these businesses are likely to prevail. This is because fundamentally, nothing has changed. A fall in share price is hardly detrimental to its financial health and business operations. So, large-cap stocks are a safe bet to buy more of when the stock market is selling off.
With zero debt on its balance sheet, 51job isn’t constrained to debt obligations and covenants, which can be burdensome during financial downturns. Highly-levered companies have to maintain a cash cushion to meet near-term interest payments as well as meet unforeseen circumstances. With no lenders’ needs to tend to, 51job enjoys financial flexibility and independence – an invaluable position to be in during bear markets. Also with a current cash holding of CN¥9.8b, 51job’s cash position is within a healthy range and more than sufficient to cover other upcoming liabilities, which means JOBS is financially robust in the face of a volatile market.
JOBS’s year-on-year earnings growth has been positive over the past five years, with an average annual growth rate of 16%, outpacing the industry growth rate of 12%. It has also returned an ROE of 15% recently, above the industry return of 13%. This consistent market outperformance illustrates a robust track record of delivering strong returns over a number of years, increasing my conviction in 51job as an investment over the long run.
Next Steps:Whether you’re convinced or not, the key takeaway here is that every stock gets hit in a bear market, but not every stock deserves the blow. When prices are dropping like flies, now is the time to do your research and buy at a discount. 51job tick the boxes in terms of its scale, financial health and proven track record, but there are a few other things I have yet to consider. Below I’ve compiled a list of factors for you to continue your reading before you buy:
- Future Outlook: What are well-informed industry analysts predicting for JOBS’s future growth? Take a look at our free research report of analyst consensus for JOBS’s outlook.
- Valuation: What is JOBS worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether JOBS is currently mispriced by the market.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.