Topic: How To Invest

Q: Pat, can I get your advice on whether Paychex Inc. is a buy? Thanks.

Article Excerpt

A: Paychex Inc., $82.22, symbol PAYX on Nasdaq (Shares outstanding: 359.3 million; Market cap: $29.9 billion; www.paychex.com), provides a range of human resources and payroll services, including accounting, salary deposits, and automatic tax payment and filing. The company’s 670,000 clients are mostly small and medium-sized businesses (10 to 200 employees) throughout the U.S. and Europe. Paychex, in fact, processes the paycheques for one out of every 12 American private-sector employees. Its customer retention is a high 81%. That recurring revenue from the company’s contracts cuts its risk. As well, Paychex’s ongoing investment in cloud-based services and solutions should strengthen its market position. The company is forecast to earn $3.10 a share in 2020. The stock trades at 26.5 times that estimate and yields 3.0%. We’ll say more about Paychex in an upcoming Advice for Inner Circle Members email. Meanwhile, Paychex Inc. is okay to hold. hold…

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