Paychex: Payroll Profits

04/28/2015 7:00 am EST

Focus: STOCKS

Jim Powell

Principal Analyst, Global Changes & Opportunities

Investors who would like a promising company with low exposure to weakening export profits should consider our latest recommendation, explains Jim Powell, editor of Global Changes & Opportunities Report.

Paychex (PAYX) is a leading provider of payroll, human resource, insurance, and benefit services to small- and medium-sized businesses.

I particularly like that it is a purely domestic company. I also like Paychex’s outlook for growth, given that small business formation is approaching record highs in America.

Many Millennials, in particular, are giving up looking for scarce jobs and they don’t want to waste their time and talents flipping burgers.

Instead, many are launching their own businesses and are using their energy and skills themselves. This is one of the most important new trends in our country and it is great cause for optimism.

As any entrepreneur will quickly tell you, handling the accounting and government paperwork for a business is a time-consuming chore that can drag a young enterprise down.

The solution is to let specialists handle the payroll, withholding, unemployment, workman’s compensation, pensions, Obamacare, and so on.

I also like Paychex’s numbers. The company’s earnings per share should grow 8% this year and at least 9% next year.

The company also has an excellent track record for increasing its dividends and currently yields 3.1%. I think the stock will perform well for us.

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