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Why I think the Seek (ASX:SEK) share price is primed to surge in 2021

Seek share price represented by the words job search on computer screen
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The SEEK Limited (ASX: SEK) share price rocketed 4.2% higher on Wednesday and I think the ASX employment group could be set to surge further.

Why is the Seek share price climbing?

Seek was one of many companies in the S&P/ASX 200 Index (ASX: XJO) to climb after Tuesday’s Federal Budget announcement. 

There is plenty to unpack from the latest budget but there are a couple of major impacts for Seek’s profitability.

Listings have dropped and advertising revenue restricted as the job market has dried up. But that could be about to change as the federal government unveiled a new employment incentive scheme.

The $74 billion JobMaker scheme provides wage subsidies to companies that hire previously unemployed Australians. The goal is to boost employment and get people off JobSeeker.

Here’s why that could spark the start of a bull run for the Seek share price in 2021.

Is this the start of a bull run in 2021?

Seek operates a number of sites that aim to match jobseekers with employment opportunities. It is essentially an online classifieds site which makes money from employer listings and advertising.

That means a strong job market is good for Seek. As you can imagine, the coronavirus pandemic has not been good for business.

However, more incentives to employ workers should mean more job listings. That is likely to increase revenue and boost earnings (and potentially dividends) in FY21.

The Seek share price has now edged 1.0% higher in 2020 but 2021 could be a good year. The Aussie group has an $8.0 billion market capitalisation and a 1.5% dividend yield right now.

Combined with strong potential share price growth, I think it could appeal to both income and growth investors.

Foolish takeaway

To me, the Seek share price looks to be turning a corner. With strong momentum and appeal across the investor spectrum, I think it could be set to outperform in 2021.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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