Here’s One Hot Stock That Could Fundamentally Rise Even Higher

Under almost any other circumstance, when you consider which business would represent a standout market idea, tax preparation doesn’t really come to mind. However, in the post-pandemic new normal, the old rules have gone out the window as the meteoric rise of H&R Block (HRB) proves. Though an idea that typically only attracts attention every April 15, investors should look into HRB stock a bit earlier this time around.

Immediately, proponents of the tax-prep service provider can point naysayers to the technical charts. On a year-to-date basis through the close of the Black Friday session, HRB stock gained a staggering 76.4%. Even on that day, which is usually quiet due to low trading volumes, H&R Block shares managed to pop up 1.2%. In contrast, the benchmark S&P 500 slipped a hair under parity. For the year, the venerable index is down 16%.

If that wasn’t enough, Zacks Equity Research considers HRB stock a top-ranked value stock. Specifically, the investment resource rates shares as a “buy.” In addition, it boasts a “Value Style Score of A thanks to attractive valuation metrics like a forward P/E ratio of 11.22.” Finally, one covering analyst revised the assessment of H&R Block upward, bringing the consensus target for earnings per share up two cents to $3.80.

According to Barchart.com, its current opinion regarding technical analysis is pegged at a 56% buy. To be fair, nearer-term indicators suggest that prospective investors may want to be careful. Nevertheless, when considering longer-term indicators, the signs point to a bullish profile for HRB stock.

Given the lack of decisively strong ideas in the market this year, the stats above for HRB stock warrant further investigation. Moreover, interested buyers should consider the below fundamental catalysts.

Crypto Meltdown Cynically Bolsters HRB Stock

At the moment, the sector that’s arguably encountering the most jitters is the cryptocurrency market. Amid the bankruptcy of the popular crypto exchange FTX, plenty of investors have undoubtedly lost confidence in the underlying blockchain industry. Personally, I’m one of the folks that’s living to fight another day.

If you want a more concrete analysis of why cryptos can still stumble lower, check out my warning about potential volatility ahead.

Now, you might still be a believer in cryptos and of course, you are entitled to that opinion. Frankly, no one will know what will happen until it happens. However, it’s almost a certainty that at least a few investors will cash out of their crypto positions. Honestly, too many risks exist for stakeholders to be blasé about the stability of their blockchain portfolios.

Naturally, in recent years, the Internal Revenue Service has taken a particular interest in crypto-related tax implications. Let’s face it – Uncle Sam wants his cut. Thus, with people dumping out of their cryptos and back into fiat currencies, this action creates a taxable event. More than likely, the IRS is keeping close tabs on these transactions.

However, crypto-related taxes are complicated for all involved. Just from an informational clarity perspective, people may seek out professional guidance such as H&R Block. Further, by using such services, crypto investors can potentially present a good-faith argument to the IRS in case of audits. In other words, such investors clearly attempted to do right by tax laws, allowing them to sleep easier at night.

The Gig Economy Bolsters H&R Block

Another factor that can help lift HRB stock higher centers on the burgeoning gig economy. By this, I’m referring to individual professionals who choose to earn a living as independent contractors (i.e. gig workers) rather than as corporate employees. While the gigging lifestyle always presented an attractive alternative to the traditional rat race, the COVID-19 crisis organically promoted this option.

When the pandemic initially capsized the U.S. economy, Corporate America responded by initiating a mass work-from-home experiment. Not surprisingly, employees saw the move as a positive one, allowing (white-collar) workers to basically phone it in. Therefore, they enjoyed the best of both worlds – a stable salary with benefits and the freedom of gig work.

However, companies naturally have trust concerns. According to a report by Resume Builder, 90% of companies stated that they will require employees to return to the office at least part of the week in 2023. Almost inevitably, this move will cause friction between employers and employees. In the worst-case scenarios, some workers will quit.

Obviously, the quitters will still need to find some way to support themselves and their families. Therefore, projections calling for the gig economy to hit over $87 billion in valuation by 2027 may be conservative.

Either way, the expansion of the gig economy will likely bolster HRB stock because taxation processes for independent contractors are much more complicated than that for “regular” employees. Therefore, should more people choose the independent route, H&R Block’s own addressable market should rise.

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