In the latest sign that the labor market continues to strengthen, unemployment hit a record low in November. According to data released on Friday, the unemployment rate fell to its lowest level since Aug 2007 last month. The number of job additions continued to hover around the 180,000 mark experienced throughout the year.

In keeping with the yearly trend, professional and business services led gains. There is additional evidence to support the view that the sector is likely to experience strong gains in the near future. Picking stocks from this sector is definitely a prudent option at this point.

Job Additions on Track

The economy added 178,000 jobs in November, significantly higher than the revised figure of 142,000 for October. Job additions were in line with expectations even as the unemployment rate declined more than expected, from 4.9% to 4.6%. However, some areas of concern were highlighted by the report. For instance, average hourly earnings fell by 3 cents to $25.89.

However, the metric registered a 2.5% year-over-year increase. Also, revised data for October and September indicate that 2,000 less jobs were added than earlier estimated. But one must consider that slowing job gains are quite natural for an economy approaching full employment.

This is best indicated by U6, the most rigorous metric of unemployment in the U.S. economy, which declined to 9.3% last month. This measure takes into account individuals who are not searching for employment or those who are working part time since they cannot secure full time employment.

Professional and Business Services Lead Gains

At the forefront of jobs gains were healthcare and construction. These sectors added 28,000 and 19,000 jobs during November, respectively. However, leading the pack yet again was the professional and business services sector which added 63,000 jobs. Over the year, the sector has added 571,000 jobs.

This is another indication of the growing important of the services sector in the economy. Meanwhile, a recent report from market research firm Freedonia Group predicts that U.S. companies providing strategic consulting services will experience a 7.8% yearly increase in revenues up to 2020. The sector is expected to gain from an increase in business fixed investment and GDP which will boost the need for strategic inputs in order to help companies determine corporate strategy more effectively.

Our Choices

Even though the latest job report highlights a few areas of concern, its nature is largely reassuring. The economy is likely to steadily add jobs in the future, lending credence to the view that the recovery may soon pick up its pace.

Professional and business services have been the biggest gainer from recent employment trends. Adding stocks from this sector looks like a smart choice at this point. However, picking winning stocks may be difficult.

This is where our VGM score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score. 

We have narrowed down our search to the following stocks based on a good Zacks Rank and VGM score.

Performance of Key Consulting Stocks Vs. Sector (YTD)

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CoreLogic, Inc. (CLGX - Free Report) is a provider of consumer, financial and property information, analytics and services to business and government.

CoreLogic has a Zacks Rank #1 (Strong Buy) and a VGM Score of A. The company has expected earnings growth of 27% for the current year. The forward price-to-earnings (P/E) ratio for the current financial year (F1) is 18.18, lower than the industry average of 19.17. The stock has returned 11.8% year-to-date, outperforming the Zacks Consulting Market sector, which has returned 11% over the same period.

Navigant Consulting Inc. (NCI - Free Report) is a provider of specialized consulting services.

Navigant Consulting has a VGM Score of B. The company has expected earnings growth of 15% for the current year. The stock has returned 56.6% year-to-date, outperforming the Zacks Consulting Market sector, which has returned 11% over the same period. The stock has a Zacks Rank #1. 

CRA International, Inc. (CRAI - Free Report) provides legal, regulatory, business consulting and other expert services through its specialized consultants across the globe.

CRA International has a Zacks Rank #2 (Buy) and a VGM Score of A. The company has expected earnings growth of 18.2% for the current year. The stock has returned 77.9% year-to-date, outperforming the Zacks Consulting Market sector, which has returned 11% over the same period.

Accenture Plc (ACN - Free Report) is one of the world’s leading providers of management consultancy, technology and outsourcing services.

Accenture has a Zacks Rank #2 and a VGM Score of A. The company has expected earnings growth of 10.8% for the current year. Its earnings estimate for the current year has improved by 0.2% over the last 30 days. The stock has returned 12.2% year-to-date, outperforming the Zacks Consulting Market sector, which has returned 11% over the same period.

The Hackett Group, Inc. (HCKT - Free Report) is a global technology consulting and strategic advisory firm.

Hackett Group has gained 5.4% year-to-date, underperforming the Zacks Consulting Market sector, which has gained 11% over the same period. However, it has a Zacks Rank #2 and a VGM Score of A.The company has expected earnings growth of 86.3% for the current year. Its earnings estimate for the current year has improved by 4.3% over the last 30 days. This provides a good opportunity to buy the stock.