Paychex, Inc. (NASDAQ:PAYX)

dividend & positive employment outlook make this a good pick, imo

The economy is coming back and jobs are increasing

PE of 18.9 & Yield of 4.2%

improving economy

might be an outperformer someday.... but thats not today sorry

Solid business
Wide moat/durable competetive advantage(s)
Persistent/predictble FCFs, returns on capital and profit margins
Strong balance sheet (cash, no debt, Current Ratio, etc)
Managers are competent stewards of owner capital
Currently trading well above FV
Fair value = 25.85
Low-Moderate FV uncertainty
Buy with 20% MOS below 20.90
Sell above 30.80

So peep this:
They have no debt, and get paid to hold money from small / medium businesses. Small and medium business uptrends lead out of recessions. When we start coming out of a recession, the fed will have to raise rates to control inflation. Paychex will then make more money per customer, and likely have more customers, leading to complete and total world domination. (Or maybe they'll just make some money, not sure).

Bottom line, you buy the stock, get paid 4.5% to pick your nose and see what happens. That's my simpleton pitch.

No debt, declining cost of sales, insider ownership, and a quality product.

PAYX will outperform in both the short term (several months) and the longer term (3-4 years). It has no debt, expenses are in line, it keeps coming up with new ways to earn money either organically or through purchases. It is profitable and will become more so as it grows over the next several years. Once the economy starts to improve, it will do much better than the market for these reasons and also because it will begin to earn a lot more money on its "float"; that is the money it holds for its clients until it is time to pay their employees etc.

Results will Beat expectations.
Fcst will be better then Expectation

Nice dividend with founder still serving as Chairman of Board and great long term record and some good potential growth businesses. Earnings growth will have significant leverage when grwoth in economy resumes while downside in earnings is limited due to nature of pretty consistent and reliable business. Potential risks from on-line services but seems to holding its own and continuing to innovate into this area.

Morningstar 5 star @ 26.60

More economic pain ahead. Layoffs must occur, new jobs must be found, payrolls will decline, then later they may rise.

Dividend won't let this fall further. Upside in customer growth, employment reversal, and outsourcing boom. Looking for more float dollars as yield curve straightens out.

This outperform pick is a long-term bet that unemployment and interest rates will eventually improve.

Paychex is a payroll and human resource service company that provides services including Payroll Services, Time and Labor Management, HR Administration & Compliance, 401(k) Employee Benefits, Group Health Insurance, and Paychex HR Solutions.

I am stating the obvious with this paragraph, but: Paychex’s business does better when unemployment is low. When more people are employed, there are more potential customers for Paychex. So when unemployment improves, so will Paychex’s business.

Likewise, when interest rates rise, so will Paychex. In addition to the fees Paychex charges for all of their various services, Paychex also earns interest on the money they hold for their clients. Low interest rates have been nothing new, of course. Paychex has been able to successfully plan around this low interest rate environment. When interest rates do rise eventually though, Paychex’s earnings stand to benefit greatly.

Unemployment and interest rates will not improve other night. It will take a while for unemployment to return to 2007-levels. Interest rates appear to be staying low for a while. But as you wait for those two factors to improve, Paychex pays shareholders a very nice 4.55% dividend yield (at the time I am writing this) to just hold the stock and wait. Not a bad deal. Not a bad deal at all.

Paychex itself is not just sitting on its hands until these economic improvements occur, however. They are adding new clients, expanding their business offerings and acquiring other companies. Paychex acquired SurePayroll, Inc. in February 2011 and ePlan Services, Inc. in May 2011.

If you believe that we have seen the worst in terms of unemployment, then Paychex is a great bet on that. Reinvest that 4.55% dividend back into Paychex. When the US economy improves substantially, you will be in a great position to take advantage of those economic improvements with Paychex.

Eventually someone will have hire folks again and since small businesses account for an awful lot (most?) jobs, there's a fair chance that Paychex will be involved in handing out paychecks.

Stable revenue with 21 P/E. No thank you ! Will probably remain stable though, if market wants to pay high price for the stable revnue/dividend.

At the moment, Paychex is a stagnant, overvalued company. Year over year changes have been great for many companies still recovering and growing as our market recovers, but PAYX has only seen a 5% increase in revenue and 3% increase in EPS. They also have a P/E of 21.1, a little high in my standards. I also dont see the cash I would like for this dividend payer and although this stock may be a stable pick in the future, it will take some time and some bearish activity first.

Set to grow in the next couple of years. Nice dividend too