NEW YORK (CNN/Money) - The unexpectedly strong March employment report was definitely a welcome development for the U.S. economy.

And that's been particularly good news for online recruitment company Monster Worldwide. The market is clearly betting that an improvement in the job market will mean monster business for its flagship site Monster.com. The stock is up more than 30 percent year to date.

QUICK VOTE    Have you used a job search Web site to find a job?   Yes   No    View results

Monster gets nearly two-thirds of its sales from its Monster.com business, which generates fees and subscriptions from job hunters posting resumes and employers seeking new workers. The rest of Monster's sales come from advertising, placing job ads in newspapers and online sites as well as ads in telephone directories.

So naturally, a healthier job market should help Monster. But Monster (MNST: Research, Estimates) trades at a scary P/E of 52 times 2004 earnings estimates and 36 times 2005 earnings estimates. Is it still a buy?

Several analysts actually think so since the fundamentals for online recruitment sites are clearly getting better as the payroll picture brightens.

Monster reported its first quarter numbers after the bell Tuesday and the results topped analysts' forecasts. The company posted earnings of 11 cents per share, up from 9 cents a year ago and a penny per share better than Wall Street's consensus estimate. Sales came in at $187.7 million, an 11 percent increase from last year. Analysts were expecting $178 million.

Several analysts felt that Monster would beat estimates since competitors had reported strong results as well. First quarter revenues from Yahoo!'s (YHOO: Research, Estimates) listing business, which includes Monster competitor HotJobs, increased 16 percent from a year ago.

And another leading online job site, CareerBuilder.com, reported a 66 percent increase in first quarter sales, according to Tribune, one of three newspaper companies that owns a stake in CareerBuilder.

In addition, analysts think earnings estimates for this year and next year, are way too low. According to Thomson First Call, analysts are expecting Monster to report earnings of 55 cents in 2004 and 79 cents a share in 2005.

Recently in Tech Biz • A tale of two IPOs • What's next for Nextel? • Can music keep MSFT growing? • The truth about Veritas

Randall Mehl of Robert W. Baird thinks Monster could easily earn 60 cents this year and 90 cents a share next year. Mehl said his earnings targets are realistic since the company should continue to steal local job listings business from the Help Wanted sections of newspapers. That more than anything will be the big trend driving business.

"There are definitely some expectations of job improvement baked into the stock but the improvement could be quite dramatic," Mehl said. "If Monster can execute well in reaching the local job market, then results should be substantially better."

But should investors be concerned that Monster is going up against online competitors with deeper pockets? Yahoo!, after all has about $2.8 billion in cash and investments. And CareerBuilder combines the resources of Tribune, Gannett and Knight-Ridder.

Steve Weinstein of Pacific Crest Securities, said there are enough online job listings to go around for all three companies. And he said Monster still has arguably the most brand name recognition of the major online competitors. "The three leading job sites are all good sites. But when we talk to recruiters, they say the best is still Monster," Weinstein said.

YOUR E-MAIL ALERTS Tech Biz Monster Worldwide Incorporated Labor By Paul R. La Monica or Create your own Manage alerts | What is this?

With that in mind, he also thinks the consensus numbers for this year and next year are too low. He has a 2004 target of 59 cents a share and 2005 estimate of 91 cents per share.

If consensus earnings estimates do wind up rising closer to the more optimistic targets of Mehl and Weinstein, that's significant because it makes the stock seem a lot less expensive right now.

Using a 2005 estimate of 90 cents per share, Monster trades at a P/E of 32 instead of 36. That's still not cheap, of course, but it's more reasonable considering that analysts are predicting a long-term growth rate of 23 percent annually for the company.

And even though the stock has already enjoyed a nice run this year, Ashish Thadhani, an analyst with Brean Murray, says he's not concerned about the stock's valuation. In fact, he thinks a multiple of 45 times 2005 earnings estimates would be fair for the company, given its growth rate.

"All the pieces of a labor market recovery are falling into place," Thadhani said. "Monster won't need a huge number of positive payroll reports to make their numbers. Expectations are conservative," he said.

So as long as the March employment figures were not a fluke, Monster's monstrous run should probably continue.

Analysts quoted in this story do not own shares of companies mentioned and their firms have no investment banking ties to the companies.

Sign up to receive the Tech Investor column by e-mail.

Plus, see more tech commentary and get the latest tech news.  

Time Warner, the parent company of CNN/Money, has a business relationship with CareerBuilder.com.