6 Reasons to Invest in Automatic Data Processing (ADP) Now
A prudent investment decision is to buy well-timed performing stocks while selling risky ones. A rising stock price and strong fundamentals signal a bull run in a stock.
Automatic Data Processing, Inc. (ADP) has been performing exceptionally lately and has the potential to maintain momentum in the near term. So if you haven’t yet benefited from the stock price appreciation, it’s time to add the stock to your portfolio.
What makes automatic data processing an attractive choice?
An overachiever: A look at the company’s price trend reveals that the stock has had an impressive run on the stock market over the past year. Automatic data processing shares have gained 16.2% over the past year, outpacing the 16% growth of industry it belongs to.
Image source: Zacks Investment Research
Solid Zacks ranking: Automatic Data Processing has a Zacks Rank #2 (Buy). Our research shows that stocks with a Zacks Rank #1 (Strong Buy) or #2 offer the best investment opportunities. Thus, the company is a compelling investment proposition at the moment. You can see the full list of today’s Zacks #1 Rank stocks here.
Northward revisions to estimates: The direction of the estimate revisions serves as an important indicator when it comes to the price of a stock. Over the past 90 days, the Zacks consensus estimate for 2022 ADP earnings rose 0.9% to $6.82 per share.
History of positive results: Automatic data processing has an impressive history of profit surprises. The company has delivered a 5.5% profit surprise over the past four quarters, on average.
Earnings expectations: Earnings growth and stock price gains are often used as indicators of a company’s prospects. For the whole of 2022 and 2023, automatic data processing profits are expected to grow at a rate of 13.3% and 11.3%, respectively, year-over-year.
Growth factors: Automatic data processing continues to enjoy a dominant position in the human capital management market thanks to strategic acquisitions such as Celergo, WorkMarket, Global Cash Card and The Marcus Buckingham Company. It has a solid business model, high recurring revenue, good margins, strong customer loyalty and low capital expenditures. In addition, it continues to innovate, improve its operations and invest in its ongoing transformation efforts.
Other actions to consider
Some other higher-ranked stocks in the Business services sector that investors can consider are Cross Country Health Care CCRN, Global NV5 NVEE and Clean ports CLH, each sporting a No. 1 Zacks rank.
Cross Country Healthcare has a four-quarter earnings surprise of 41.5% on average.
Shares of Cross Country Healthcare have jumped 73.1% over the past year. The company has long-term earnings growth of 6.5%.
NV5 Global forecasts a profit growth rate of 6.1% for the current year. It generated a surprise on the profits of the last four quarters of 22.2% on average.
Shares of NV5 Global have jumped 44.1% over the past year. The company is posting long-term earnings growth of 14.2%.
Clean Harbors forecasts a 17% profit growth rate for the current year. The company has a four-quarter earnings surprise of 43.2% on average.
Shares of Clean Harbors have jumped 25.5% over the past year.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.