Employee Benefit Plans Boost Wageworks

03/02/2017 7:00 am EST


Leo Fasciocco

Investment Columnist and Publisher, Ticker Tape Digest

Wageworks (WAGE), which administers consumer-directed benefits (CDBs), is our latest featured breakout stocks, explains technical expert Leo Fasciocco, editor of Ticker Tape Digest.

WAGE administers CBDs, including pre-tax spending accounts, such as Health Savings Accounts  health and dependent care Flexible Spending Accounts and Health Reimbursement Arrangements.

It also takes care of Commuter Benefit Services, including transit and parking programs, wellness programs, consolidated omnibus budget reconciliation act and other employee benefits.

Its CDB programs assist employees and their families in saving money by using pre-tax dollars to pay for certain of their healthcare, dependent care and commuter expenses. Employers financially benefit from its programs through reduced payroll taxes.

The stock climbed from $56 back in late October to a peak near $75. It then formed a tight flat base above its 50-day moving average line.

The stock has now broken out of a 15-week flat bases. The breakout was triggered by favorable quarterly earnings. The move carries the stock to a new all-time high.

This year, analysts are forecasting a 39% jump in net to $1.25 a share from 90 cents a year ago. Net for the first quarter is expected to leap 36% to 30 cents a share from 22 cents the year before.

Profits for the second quarter should rise 23% to 27 cents a share from the 22 cents the year before. The company tends to come in close to the consensus estimate.

The stock sells with a price-earnings ratio of 62. That is high. So, the stock is most suitable for aggressive investors.

Going out to 2018, the Street is projecting a 21% gain in net to $1.50 a share from the anticipated $1.25 this year.

Our research shows that recentlyWAGE has score some very good gains off of its breakouts. Although the stock has a high p/e, it remains in a strong long-term uptrend.

We are targeting WAGE for a move to $92 per share off this breakout. A protective stop can be placed near $73.

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