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Could This Stock Be a Big Winner From the U.S. Labor Shortage?

By Matthew Frankel, CFP® and Toby Bordelon – Oct 13, 2021 at 7:11AM

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While the labor shortage isn't an ideal situation for the economy, it could be a catalyst for this company.

Simply put, there are more jobs right now than there are qualified workers, and this has led employers to become more competitive with one another -- not just when it comes to wages, but employee benefits as well. In this Fool Live video clip, recorded on Sept. 29, Fool.com contributor Matt Frankel, CFP, explains to colleague Toby Bordelon why HealthEquity (HQY 1.28%) could be a big winner. 

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Matt Frankel: HealthEquity, if you're not familiar, they are a health savings account or HSA custodian. They're the largest HSA custodian, that's not a bank. They've put out some recent data that really tells you that they could be a big winner of the current trends in employment right now. We all know there is a labor shortage all over the country. If you've tried to go to your favorite restaurant or tried to have a house built or tried to have a contractor come over your house, you know, labor is a big obstacle. Employers are really having to compete with each other more by offering innovative and more attractive benefit packages.

An HSA is a health savings account. They're benefits that are very valued by a lot of employees, and that a lot of employers don't offer. Just to give you some of the statistics, 46% of HSA participants, these are accounts that they help you save money for healthcare expenses. 46% of participants have increased their contributions during COVID for obvious reasons, makes them feel a little safer to have some money put away for health issues right now. In fact, 77% say that it is provided them peace of mind during COVID.

Of people who have an HSA, the majority of them ranked them within their top three most important benefits. That includes things like health insurance and dental insurance and retirement plans and things like that. That means the majority rank HSAs in the top three of all those. Very valuable benefits, and I think HealthEquity can be a real beneficiary as employers really need to start competing with each other.

Toby Bordelon: One thing you mentioned, Matt, you said health equity is the largest HSA that's not a bank. Is there an advantage to that for them to not being a bank, that would make it more attractive to me as an investor potentially?

Frankel: Well, it means that they are all in on their core product. Same reason that people use Better Mortgage and Guaranteed Rate for home loans instead of walking into a Wells Fargo. Same reason people use SoFi for their investment needs instead of going into a bank for those, and the same reason people like Cash App so much. It's because they're really all-in on the customer experience and on their core product. Does it give them an advantage financially? That's up for debate. But they are all-in on serving the health savings account market and I think that in itself gives them a real advantage. Do you want to a company that really is the best-in-breed at what they do.

Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Toby Bordelon owns shares of HealthEquity. The Motley Fool owns shares of and recommends HealthEquity and SoFi Technologies, Inc. The Motley Fool has a disclosure policy.

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Stocks Mentioned

HealthEquity Stock Quote
HealthEquity
HQY
$62.51 (1.28%) $0.79
Wells Fargo Stock Quote
Wells Fargo
WFC
$47.44 (0.23%) $0.11
SoFi Technologies, Inc. Stock Quote
SoFi Technologies, Inc.
SOFI
$4.60 (-1.29%) $0.06

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