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Human Resource Management Stocks - Buy or Stay Away?

Human Resource Management Stocks - Buy or Stay Away?

By Bob Kohut 05.11.2018


In the eighteenth century a Scottish textile manufacturer – Robert Owens – popularised the concept of personnel management to create, utilise, and maintain a work force capable of achieving the objectives of the business.  Personnel departments began to be put in place to recruit, train, place, track, and maintain a company’s employees.

Today Personnel Departments have faded into history, replaced by the more appealing moniker, Human Resources Departments.  The functions remain the same, but the information age has radically altered the way the business world manages them.

First there was an array of sophisticated business software, purchased and maintained by the company.  Software updates and ongoing maintenance was available from the software developer at an additional fee.  

The digital revolution changed all that with the advent of “cloud computing” given rise to the Software as a Service (SaaS) business model adopted by the world’s software developers.  Here companies essentially rent needed software freeing the client business from the need to house and manage the program internally.

Virtually all aspects of business operations have SaaS programs available, and human resources management is no exception.  Sophisticated human resources software frees up company resources to focus more on the core functions of the business.

Some vendors of HR management software have been hailed as “revolutionary” with claims of disruptive technologies fueling investor interest.   A new entry in the sector, Jobstore® Group, is expected to begin trading on the ASX on 5 December of 2018.  

The pre-listing hype likely to get the hearts of rabid growth investors skipping a beat could be artificial intelligence.  The company, incorporated in 2015 and based in Malaysia, offers an AI powered software platform for online talent sourcing, application tracking, and human capital management (recruiting, payroll, and workforce analytics.)  

Three years ago this company might have been hailed as the next 1-Page Limited, a market darling that entered the ASX with a Silicon Valley pedigree and an impressive client list. 1-Page is gone, delisting from the ASX recently with plans to reinvent itself as a marijuana company.

Another promising human resources management ASX entry that fizzled is Reffind Limited (RFN), a one-time market favorite that rose more than 600% in its first year of trading before completely collapsing.


A little more than three years ago Reffind’s stock price was up close to 700% and already anointed as the next 1-Page.  The company offered a cloud-based employee management platform allowing efficient communication between management and employees.  Like 1-Page the company’s “revolutionary” platform failed to generate long-term enthusiasm in the business world.

The failure of these two companies stand as a stark reminder that hype sometimes fails to deliver.  There are other human resources management micro-cap stocks with performance track records and some newer entries. Of special interest to investors burned by the failures of 1-Page and Reffind are the companies with more broad-based platforms.   Recruitment and training are two of the first corporate concerns to fall by the wayside in challenging economic climates.


People Infrastructure (PPE) has been in business since 1996 and listed on the ASX on 22 November of 2017.  The company has reported solid financial results in both its Half Year and Full Year 2018 reporting.  For the full year, PPE saw revenues increase 14.3% over FY 2017, beating its IPO forecast by 2.4%.  Profit rose 16.6%, beating the forecast by 11.5%.

The company is well diversified, extending beyond recruiting to include on-boarding, rostering, timesheet management, payrolling, and workplace health and safety.  People Infrastructure focuses on small to medium sized companies with contracted workforces in need of HR outsourcing.  Its clients represent a variety of business sectors, from hospitality to infrastructure to industrial to construction to childcare to government to food processing and mining.

Over the past three years the company has achieved compound average growth rates (CAGR) of 15.4% for revenue; 13.8% for net profit after tax and amortisation (NPATA); and 13.1% for employees in the company’s payroll processing system.  Since listing People Infrastructure has extended its client reach into nursing and the Information Technology sector.  The company has an analyst consensus BUY rating. 

Xref Limited (XF1) caters to a niche market within the employment recruiting process – reference checking.  Client companies can get a detailed reference check and work history report within 24 to 36 hours.  Requesting a reference check takes all of 20 seconds!

The company has been in business since 2011 and they are growing with current offices in Sydney, London, Toronto Canada, and in Norway.  The company listed on the ASX in early 2016 via a reverse takeover.  Xref has been steadily adding clients and now has more than 750 companies using the Xref platform worldwide. 

At the time of its listing the company boasted of 20% of the ASX 50 companies using its platform, which the company claims produces reports with 98% accuracy and more detail than traditional methods of reference checking.  The issue price was $0.20 per share and the stock opened trading at $0.33, with the share price rising 55% since coming on the ASX. 

The company’s Full Year 2018 Financial Results featured a 72% increase in total sales but has yet to turn a profit.

Ashley Services (ASH) listed on the ASX in 2014 and the share price began falling immediately before stagnating in 2016.


The company has three operating divisions – Labour Hire, Recruitment, and Training.  The company may have been tainted with the bad brush of scandal associated with the vocational training sector, although only one of Ashley’s three training brands was directly involved in vocational training.  In 2017 the company made the strategic decision to focus on its Labour Hire operations, streamlining the Training Division.  

The Labour Hire division provides quick turnaround in both recruiting and training with its pool of available candidates.  The company serves a wide variety of business sectors.  The Recruitment division focuses on “white collar” hires, including permanent, temporary, and contract employees. 

The company has been grown revenues in each of the last three fiscal years but failed to turn a profit until the release of the Full Year 2018 report.  Investors were pleased.


With an average trading day volume of about 17k shares, HiTech Group (HIT) qualifies as an “under the radar” stock, despite its financial performance record of increasing revenue and profit in each of the last three fiscal years.

The company has been in business since 2000, with an impressive share price performance over the period, especially over the last ten years, with total shareholder return of 42.1%. The company has a current dividend yield of 8.9% and has grown dividends 74% over five years.


The company focuses on the ICT (Information and Communication Technology) sector, serving Federal Government agencies as well as companies in technology, industry, and banking/financial services. The company provides recruitment consulting services, but its principal focus is its HiBase cloud-based platform boasting a list of more than 300k candidates.

Another recent entry into the sector, and now the largest by market cap, is Elmo Software (ELO), debuting on the ASX on 30 June of 2017 with an opening price of $2.17 per share.  After a relatively slow start out of the gate, the stock price took off. 


Elmo claims to be the fastest growing HR tech company in the Asia Pacific Region, serving more than 1,000 companies with its array of modular cloud-based offerings.  The company’s three product categories are HR Core; Recruitment Cloud Solutions; and Learning Management Systems.  Within these categories customers can find software modules to meet an array of HR needs, including recruitment, onboarding, performance management, learning and development, rewards and recognition, remuneration, succession planning, and payroll.

In March of 2018 the company completed a successful institutional placement, raising $45 million dollars to accelerate growth.  While revenue is growing, the company has yet to show a profit while it aggressively pursues a growth by acquisition strategy, expanding its suite of software modules.


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