Paychex Rising With Payroll Numbers

NEW YORK (TheStreet) -- If the below graph from the Bureau of Labor Statistics is believable, U.S. unemployment is dropping as the number of people employed is rising.

It would seem that companies providing human resources and payroll processing functions may be a growth industry. Monday, I noticed Paychex ( PAYX), a human resources and payroll processing company, was high on the list of Nasdaq 100 stocks consistently hitting new highs.

Let's look at some of the factors that might want to make you put this stock on your watch list:

Fundamental factors: 17 Wall Street brokerage firms have assigned 24 analysts to monitor the company's numbers. They project revenue will increase 4.5% this year and another 5.8% next year.

Earnings are estimated to increase 6% this year, an additional 6.9% next year and continue to increase 9.1% annually for the next five years. The market cap is $12.73 billion, P/E 22.68 and the dividend yield 3.71%. The Financial Strength is A and TheStreet rates it an A- stock.

Technical factors provided by Barchart: Barchart gave the stock a 72% technical buy signal as well as a Trend Spotter buy signal. The stock is trading above its 20-, 50- and 100-day moving averages and has advanced in 11 of the last 20 trading session for a gain of 2.88% this last month and 9.45% in the last three months. The Relative Strength Index is 57.12 and Barchart computes a technical support level at 34.20. The stock closed Monday at $35.06 with a 50-day moving average of $33.77.

Investor interest: Professional analyst have issued one strong buy, 18 hold, two underperform and three sell recommendations. The individual investor on Motley Fool is more bullish and 1,537 investors gave the stock a 95% vote to beat the market. Short sellers have increased their positions slightly from 17.3 million shares at the end of last year to about 19.7 million shares recently. If the price continues to increase they might have to cover those positions

Peer comparison: In the last year, while Paychex was up 14%, Accenture ( ACN) was up 21%, Automatic Data Processing ( ADP) up 19% and Infosys ( INFY) down 8%.

Accenture: market cap $49.23 million, P/E 19.30, dividend yield 2.11%, five-year estimated annual earnings growth 10.67%, Financial Strength A++, TheStreet rating A.

Automatic Data Processing: market cap $31.12 million, P/E 23.20, dividend yield 2.69%, five-year estimated annual earnings growth 9.08%, Financial Strength A++, TheStreet rating A.

Infosys: market cap $29.57 billion, P/E 17.23, dividend yield 1.20%, five-year estimated annual earnings growth 15%, Financial Strength A+, TheStreet rating B.

Conclusion: Payroll numbers are climbing slowly and so has the price of Paychex. This looks to be a slow and steady play and if you enter at this point. Carefully monitor the stock's moving averages and the 14-day turtle channel for price weakness:

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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