Why Paychex Inc. Shares Could Fly to $50

Does this analyst make a good case? Or is it just more noise from Wall Street?

Jul 8, 2014 at 10:50AM

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Paychex (NASDAQ:PAYX) gained 1% on Tuesday after Goldman Sachs resumed coverage on the payroll processing giant with a "conviction buy" rating.

So what: Along with the bullish call, analyst James Schneider planted a price target of $49 on the stock, representing about 18% worth of upside to yesterday's close. So while momentum traders might be turned off by Paychex's year-to-date price weakness, Schneider's call could reflect a sense on Wall Street that its growth prospects are becoming too cheap to pass up.

Now what: According to Goldman, Paychex's risk/reward trade-off is rather attractive at this point. "We believe market concerns around intensifying competition from cloud vendors are overdone, and think Paychex's integrated approach to payroll and HR services supported by a broad-based services model will continue to differentiate it," said Schneider. "In our view, this is evident from continuous improvement in operating margins and growing client retention rates, in spite of the noise around cloud cannibalization." Given Goldman's solid stock-picking track record -- currently ranked in the top 15% of our CAPS community -- value-oriented Fools might want to take a closer look at Paychex.

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Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Paychex. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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