Trade-Ideas LLC identified

Paychex

(

PAYX

) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Paychex as such a stock due to the following factors:

  • PAYX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $143.0 million.
  • PAYX has traded 1.1 million shares today.
  • PAYX is trading at 6.00 times the normal volume for the stock at this time of day.
  • PAYX is trading at a new high 3.01% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on PAYX:

Paychex, Inc. provides payroll, human resource, insurance, and benefits outsourcing solutions for small to medium-sized businesses in the United States and Germany. The stock currently has a dividend yield of 3%. PAYX has a PE ratio of 27. Currently there are 2 analysts that rate Paychex a buy, 6 analysts rate it a sell, and 10 rate it a hold.

The average volume for Paychex has been 1.8 million shares per day over the past 30 days. Paychex has a market cap of $20.0 billion and is part of the services sector and diversified services industry. The stock has a beta of 0.95 and a short float of 5.6% with 7.35 days to cover. Shares are up 6.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Paychex as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, expanding profit margins and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 7.5%. Since the same quarter one year prior, revenues slightly increased by 6.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • PAYCHEX INC has improved earnings per share by 8.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PAYCHEX INC increased its bottom line by earning $1.84 versus $1.71 in the prior year. This year, the market expects an improvement in earnings ($2.04 versus $1.84).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the IT Services industry average. The net income increased by 6.5% when compared to the same quarter one year prior, going from $169.40 million to $180.40 million.
  • The gross profit margin for PAYCHEX INC is currently very high, coming in at 74.02%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.97% is above that of the industry average.
  • Net operating cash flow has increased to $371.30 million or 28.87% when compared to the same quarter last year. Despite an increase in cash flow, PAYCHEX INC's average is still marginally south of the industry average growth rate of 31.45%.

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