PCTY - Paylocity: A Strong Buy That's Flying Under The Radar
2024-01-26 14:38:41 ET
Summary
- Paylocity is capturing market share from major players, with a substantial and expanding TAM ahead.
- A high-growth, high-ROC company at a reasonable price – a rare find.
- Founder and CEO with substantial skin in the game.
- Huge SBC dilutes shareholders, but buybacks keep it reasonable.
- Fragmented competitive market.
My thesis
I'll start with the bottom line: it's hard to find a company experiencing top-line growth above 15% at a reasonable valuation, not to mention being considered cheap. At 26 times NTM earnings, I believe we have a notably reasonably priced stock here.
There are many factors to like about Paylocity ( PCTY ). It's growing rapidly, gaining market share, and returning high Returns on Capital figures to shareholders. The company boasts significant insider ownership, with experienced management and the founder serving as the chairman of the board. PCTY maintains a customer-focused approach, a common trait among successful companies. Additionally, it focuses on its vast and growing Total Addressable Market, standing as the leading platform in it....
Paylocity: A Strong Buy That's Flying Under The Radar