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6 Reasons to Invest in Automatic Data Processing (ADP) Now

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A prudent investment decision involves buying well-performing stocks at the right time while selling those at risk. A rise in share price and strong fundamentals signal a stock’s bullish run.

Automatic Data Processing, Inc. ((ADP - Free Report) ) has performed exceptionally well lately and has the potential to sustain its momentum in the near term. Consequently, if you haven’t taken advantage of the share price appreciation yet, it’s time you add the stock to your portfolio.

What Makes Automatic Data Processing an Attractive Pick?

An Outperformer: A glimpse at the company’s price trend reveals that the stock has had an impressive run on the bourse over the past year. Shares of Automatic Data Processing have gained 16.2% over the past year, outperforming the 16% growth of the industry it belongs to.

Zacks Investment Research
Image Source: Zacks Investment Research

Solid Zacks Rank: 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 complete list of today’s Zacks #1 Rank stocks here.

Northward Estimate Revisions: The direction of estimate revisions serves as an important pointer when it comes to the price of a stock. Over the past 90 days, the Zacks Consensus Estimate for Automatic Data Processing’s 2022 earnings has climbed 0.9% to $6.82 per share.

Positive Earnings Surprise History: Automatic Data Processing has an impressive earnings surprise history. The company delivered an earnings surprise of 5.5% in the last four quarters, on average.

Earnings Expectations: Earnings growth and stock price gains often serve as indicators of a company’s prospects. For full-year 2022 and 2023, Automatic Data Processing’s earnings 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 through strategic buyouts like Celergo, WorkMarket, Global Cash Card and The Marcus Buckingham Company. It has a strong business model, high recurring revenues, good margins, robust client retention and low capital expenditure. Further, it continues to innovate, improve operations and invest in its ongoing transformation efforts.

Other Stocks to Consider

Some other better-ranked stocks in the broader Business Services sector that investors may consider are Cross Country Healthcare (CCRN - Free Report) , NV5 Global (NVEE - Free Report) and Clean Harbors (CLH - Free Report) , each sporting a Zacks Rank #1.

Cross Country Healthcare has a trailing four-quarter earnings surprise of 41.5%, on average.

Cross Country Healthcare’s shares have surged 73.1% in the past year. The company has a long-term earnings growth of 6.5%.

NV5 Global has an expected earnings growth rate of 6.1% for the current year. It delivered a trailing four-quarter earnings surprise of 22.2%, on average.

NV5 Global’s shares have surged 44.1% in the past year. The company has a long-term earnings growth of 14.2%.

Clean Harbors has an expected earnings growth rate of 17% for the current year. The company has a trailing four-quarter earnings surprise of 43.2%, on average.

Clean Harbors’ shares have surged 25.5% in the past year.