Turkey of the Week: let this recruitment company go

Recruitment agencies keep churning out solid updates, but if there is a downturn in the economy they will be hit hard - this stock in particular.

This week, the British Chambers of Commerce warned that UK GDP growth is set to drop from 2.8% in 2006 to 2.5% this year, and then 2.0% in 2008. The main culprit? Four interest-rate rises since August 2006, along with the imminent prospect of another 0.25% hike to 5.75%. So it's no surprise that traditional cyclical stocks, such as house builders, trade on p/e ratios for 2007 of around 10-12 times. But what is puzzling are lofty valuations in the notoriously feast or famine' recruitment sector. Sure, agencies keep churning out solid updates, but if you consider the past two downturns, this cannot go on forever.

Turkey of the week: sThree (STHR), tipped as a BUY by UBS

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Paul gained a degree in electrical engineering and went on to qualify as a chartered management accountant. He has extensive corporate finance and investment experience and is a member of the Securities Institute.

Over the past 16 years Paul has held top-level financial management and M&A roles for blue-chip companies such as O2, GKN and Unilever. He is now director of his own capital investment and consultancy firm, PMH Capital Limited.

Paul is an expert at analysing companies in new, fast-growing markets, and is an extremely shrewd stock-picker.