What happened

Shares of Paycom Software (NYSE:PAYC) popped 30.9% in November, according to data from S&P Global Market Intelligence, as Wall Street digested the online payroll and HR technology company's latest quarterly results.

So what

That said, Paycom shares climbed only modestly in the days following its third-quarter 2019 release on Oct. 29, when it detailed a 31% increase in revenue to $175 million -- well above guidance provided in July for a range of $170 million to $172 million -- and 34% growth in adjusted net income to $41.1 million, or $0.70 per share. At the time, Paycom founder and CEO Chad Richison called it "a particularly strong quarter with robust new client additions and strong demand" for its core HCM solutions.

Stock market charts on a colorful LED display indicating gains.

Image source: Getty Images.

But Paycom's gains accelerated as November wore on, including a 9% single-day pop on Nov. 20 alone after analysts at RBC Capital raised their rating on the stock to outperform (from sector perform) with a $278-per-share price target (up from $230 before). In particular, RBC argued that Paycom should be able to achieve sustained, profitable growth with the help of its enviable pricing power and high customer-retention rates.

Now what

Paycom is performing well to that end: For the current quarter, Paycom told investors revenue should increase roughly 26% year over year to a range of $188.5 million to $190.5 million. But if the company extends its habit of underpromising and overdelivering in its coming quarters, I suspect it will remain a top software-as-a-service stock pick for the foreseeable future.