Paychex, Inc. (NASDAQ:PAYX)

I'll admit it, PAYX has been a dissapointment to me. I bought it in anticipation of interest rate increases (remeber that the company derives a portion of it's income be investing other people's money during the float period) and those have just recently begun to appear. The company is extremely well run with excellent proffitablity ratios, but remains fairlty expensive. On the other hand, dividend growth has been healthy and I am getting more dividend yield than if I had plunked my money in a MMF. Along with modelst capital appreciation it's not been a bad ride.

I am just optimisitc enough to feel that the company will grow in to it's valuation in the next couple of years and then show superioor price appreciation. It may balready have started.

vl

MI/MFI

super well managed; high standards. nuff said

I like the chart

Paychex showed a gross margin of 66%, a net margin of 28% and a margin of FCF to Revenue of nearly 30% on its last 10K. Also grew sales at 16% year over year. Bad news: this stock is expensive. IMHO worth it in the long term.

early test of 2007 picks

excellent customer base and employee training

Hi Div, No Debt, A+ S&P (E and Div)

explosive, or at least solid dividend growth. if this isn't a stalwart i don't know what is. also extremely high call/put ratio over the past few days. something must be going on? fast money called the options play btw.

great balance sheet with decent dividend

Barriers against competition.

In these first few week of 2007 (and especially since Feb 27), investors seems at an impass. They seem to be waiting for some unknow catalyst to push them forward, but willing to dive out of the market at the drop of a Chinese hat. I expect more of this in 2007, and stocks that have great unerlying fundamentals like PAYX will weather the storm. Buy PAYX, and get PAID!

Solid Dividend growth

S2007 . . .

Paychex is one of my favorite stocks. I think it has an economic moat, because of its scale and the high barriers to enter the industry - its small and medium-sized clients don't have a lot of negotiating power, or the ability to form their own payroll divisions, and switching costs are high. The business has scaled well, and operating margins went all the way up to 39% in 2006. Their returns on invested capital are also excellent. They have the ability to cross-sell products to their existing client base, and at the same time, only about 20% of their potential market outsources payroll functions, so PAYX has a lot of potential room to expand - kind of the same position Sysco (SYY) is in. It's a stock you could buy and hold for a long time, but I think it's near fair value today.

Solid company in Rochester NY

No debt, good growth of sales and eps. High profitability

Strong fundamentals, Good financials, No Debt, High retention rate of clients and Room for more growth.