Brooke ThackrayPaychexPAYXWATCHMay 23, 2018

Pays a dividend of 4.7%. Shares are pressured over fears that AI will take over this business. He can't tell what the outcome will be.

Is down 14% over 3 months, but he thinks it's doing well and would buy it. Pays a 4.5% dividend.

Focus is on small and medium businesses, so investors are concerned about even small upticks in unemployment. Good, steady company. Attracts a premium valuation. Don't have to worry about AI so much right now; AI can assist (rather than replace) its work, and provide more data. The debate now is about whether the economy grows or shrinks.

They reported a mixed quarter: in-line earnings and slightly lower revenue, but the full-year revenue forecast was light, though earnings forecast was fantastic. Made new sense that shares slid 9% today. He likes their merger with Paycore which may have made their quarter harder to understand.

They announced Monday that they finished taking over rival Paycor in a sector that needs consolidation. Now, PAYX is in a much better position to take market share. They reported a good quarter last March, but that was before tariffs hit.

Reported a great quarter on Q3 with a modest top and bottom line beat and positive conference call. Shares popped 4% today.

Is a domestic US company, so it faces no tariff risk. Is Trump cuts taxes 15%, this adds 20% to growing earnings for PAYX. Margins have been growing, and they just bought a company that will accrete to earnings (they report tomorrow). Trades at a high 28x PE, but the dividend grows 10% annually. Has owned this 30 years.

It reports Wednesday. It got smoked in their last report, though Paychex will continue to do well, defying the bears.

Has done well over time, but he far prefers ADP.

Paychex will buy Paycor, a rival, for $4.1 billion. Pacyor will give PAYX more scale to broaden their offerings. Likes this deal.

Recent earnings were up 4%. Veritable cash cow because they bank all the payroll taxes (that customers submit to the IRS) at current interest rates. It's like free money on top of earnings. Revenue growth was double GDP. Entirely domestic, so protected from trade barriers. 

Services small companies, so if the economy does well from tax cuts, this name should continue to grow. Long-term, compounding annual returns of 14-15% -- you double your money roughly every 4-5 years. A buy and hold, not a trade.

It reports next week. If the Fed stops cutting rates, the street expects this stock to fall. Wait to hear what the Fed says next week. This yields 2.7%. He'd buy this at 3%.

Fantastic payroll business. Main segment is small/medium size business owners. Very good business performance. Sector consolidation has provided opportunity for company. Would recommend holding - share price high. If share prices fall - good time to buy. 

Money sent to them is invested as a short-term float before paying it out, so interest rates matter. Rates coming down means potentially less income earned. He's held for last 10 years and would never sell.

They just delivered a top and bottom line beat. Is the number one payment processor for small-mid-sized businesses.