Paychex (PAYX-Q)

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.

Shares fell today 6% on earnings, which he liked, including their forecast, but Wall Street didn't. Usually, their shares fall after reporting which makes this another buying opportunity.

Since 1995, has returned 14% annually. Margins have been growing as they've grown beyond payroll processing among small/medium-sized businesses, which offer growth. They benefitted from higher interest rates. He continues to buy it, though it's currently expensive. They project 6-8% revenue growth but will be hit if the economic weakens or rates decline.

They report Thursday. Pays a terrific dividend, but unfairly this name attracts analyst downgrades even when it does well.

A growthier name in the space. Likes the space, but pay attention to what you're paying for growth. Economic weakening will impact it. He's seeing better opportunities in larger-cap, software names like MSFT and AAPL.

They process payrolls for small/medium businesses. They just reported solid top and bottom line beats and raised guidance for this fiscal year. It pulled back hard earlier this quarter, but rebounded hard today.