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NEW YORK (CNN/Money) – The first two months of 2005 have been terrifying for investors in Monster Worldwide.

After gaining more than 50 percent last year, shares of the online job recruitment company have plunged nearly 13 percent this year.

Monster Worldwide (Research) generates nearly 75 percent of its sales from fees it gets from job applicants and employers looking to hire. So Wall Street is fretting about the impact of a sluggish labor market in December and January.

And with the February employment figures due out on Friday, investors have to hope for growth above the consensus estimate of 225,000. Otherwise, Monster could be in for another round of selling.

But has Wall Street overreacted to the relatively lackluster news on the labor front?

It appears so. After all, Monster's profits are expected to increase by 40 percent this year and another 33 percent in 2006. So Monster's current valuation of 34 times 2005 earnings estimates seems reasonable.

Mark Mahaney, an analyst with American Technology Research, said that investors may be putting too much emphasis on the monthly employment figures and ignoring that Monster continues to steal job related ad revenues away from newspapers.

"There is a steady migration of recruitment dollars going online," said Mahaney. "Employment figures are trading catalysts but this is a secular growth story, not a cyclical one, so month-to-month employment numbers are less and less relevant."

To that end, Monster's own employment index for February showed increased online job recruiting activity.

What's more, another analyst argues that the job market hasn't been as bad as many are making it out to be.

"Too many individuals are focusing on one month rather than looking at what the trend has been for the past year and frankly we're at where we should be at this point of an employment recovery," said James Janesky, an analyst with Ryan Beck. "There is underlying job growth."

But investors aren't just worried about the health of the labor market. Last month, Monster lowered its first-quarter earnings target because of higher marketing expenses.

That has raised some concerns that increased competition from the likes of Yahoo!'s HotJobs and CareerBuilder, which is co-owned by newspaper publishers Gannett Co (Research)., Tribune (Research) and Knight-Ridder (Research), could be taking a toll. Some think that Monster may also have to worry about eBay (Research), which owns 25 percent of the popular online classified site Craigslist.

Ashish Thadhani, an analyst with Gilford Securities, thinks these fears are overdone as well since Monster has been outperforming its top rivals.

The company reported organic sales growth -- which excludes sales from companies it has acquired -- of 28 percent in its Monster jobs division during the fourth quarter. Yahoo! (Research) posted sales growth of just 15 percent from its listing business, which includes HotJobs, in the fourth quarter.

"Monster is as well-positioned as it has been in years. The company clearly is the leader," Thadhani said.

In addition, Thadhani said that investors could benefit if Monster decides to jettison some of its slower-growth offline businesses. Monster Worldwide owns a Yellow Pages ad agency and direct marketing firm.

One last concern appears to be that an aggressive acquisition strategy could hold back profit margins. Monster has made several deals to expand outside of its core U.S. market, most recently buying a job site in France and a 40 percent stake in a Chinese online recruitment firm.

But Janesky said that it's shortsighted for investors to worry about this. He thinks the company is making a wise strategic move to bolster its international presence.

"The North American employment market is still nowhere near tapped out but it is getting more competitive. So in order to sustain growth, Monster has to look at other areas and it is being proactive about that," said Janesky.

So when all is said and done, savvy investors shouldn't get spooked if the February jobs report comes in lower than expected. This looks like a good time to do the Monster Mash.

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

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

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