ADECCO: Bottom formation with price fluctuations!

The shares of the recruitment company ADECCO recovered significantly with prices above CHF 34, but had to give way again in the short term due to the moderately lower quarterly figures of the competitor Manpower (July 20). Fortunately, on the same date came the excellent news that ADECCO subsidiary Akkodis had received a major contract from the Canadian Ministry of Defence; the scope is CAD 136 million and includes a joint venture with Thales Canada and KWESST Micro Systems. The contract period lasts until April 2028 and has five additional one-year extension options. This major contract also promises good returns and confirms the innovation strategy! In addition, ADECCO benefits from strong labor markets and a still stable US economy. Global shortages of personnel and skilled workers are widespread; in addition, baby boomers are leaving the workforce. Wage inflation is also driving ADECCO revenues. The recruiter is benefiting from diverse constellations... perhaps more than Manpower or Randstad? However, economic realities are complex and contradictory. Core inflation rates in America and Europe are still high and central banks intend to continue to turn the interest rate screw, despite a looming recession. It is precisely the shortage of personnel and the newly created jobs that are seen as reasons to raise interest rates further; the economy and rising prices want to be slowed down. However, raising interest rates too much carries high risks and we investors must be extremely careful with our capital!

On August 3, ADECCO will present quarterly figures. We expect a continuation of the newly embarked promising path. Many investors are underinvested in the stock. If expectations are met or exceeded, the share could set off on an impressive high. Our medium-term price target is CHF 43!