Investors should consider buying stock in Paychex and Automatic Data Processing after the jobs report

From Nasdaq: 2024-07-05 17:49:00

The US jobs market has been resilient and is rapidly recovering, with employers adding 206,000 jobs in June. The unemployment rate rose to 4.1%, the highest since 2021. Paychex and Automatic Data Processing are key players to watch in this recovery.

Despite their flat stock performances, both Paychex and Automatic Data Processing have attractive growth trajectories. ADP’s total sales are projected to rise 6% in FY24, while Paychex’s top line is expected to expand 4% in the same period.

Paychex’s stock trades at 23.5X forward earnings, while Automatic Data Processing is at 25.8X. Both are seen as having high valuations compared to industry averages, with Paychex’s P/S ratio at 7.6X and ADP’s at 5X.

ADP and PAYX offer generous dividends with annual yields of 2.36% and 3.34% respectively, outperforming the S&P 500’s 1.26% average. Both stocks hold a Zacks Rank #3 (Hold), suggesting caution despite their growth potential.

Research experts highlight a promising stock set to double in value, targeting millennial and Gen Z audiences. This company generated nearly $1 billion in revenue last quarter and presents significant upside potential for investors.



Read more at Nasdaq: Should Investors Buy Stock in These Payroll Processers After Friday’s Jobs Report?