Continuing to produce strong growth, human capital management leader Paylocity has earned a spot on the list of new buys by the best mutual funds. PCTY stock is now taking aim at a new buy point as it holds the bulk of its gains after August's huge gap-up.
Energy and medical names dominate this potent stock screen, which tracks investments by top money managers. These funds are also scooping up Apple and Nasdaq, revealing an appetite for tech stocks, including Paylocity.
Technology leaders are stumbling as the market indexes sell off but longer-term institutional demand in these companies bodes well for a rebound in this widely held but struggling sector.
Paylocity also earns spots on the IBD 50 and the IBD Leaderboard watchlists.
Paylocity Spurs Growth With Human Resources Software
Based in Illinois, Paylocity is a leading provider of payroll and human capital management (HCM) software solutions. Its products cover all aspects of human resources, including benefits administration, hiring talent and workforce management.
The provider targets businesses with fewer than 50 employees. It stands apart from its rivals thanks to a network of partners that includes 401(k) advisers.
Last month, Paylocity teamed up with Revere Plastics to co-win research firm Brandon Hall Group's 2022 Excellence Award for the "Best Approach to HCM Innovation" in the "Future of Work" category. In addition to the joint award, Paylocity took home five additional wins, including "Diversity, Equity, and Inclusion" support, "Leadership Development" and "New Hire Onboarding."
While garnering human resources accolades, Paylocity has also generated impressive growth.
Over the last three quarters, the company has delivered average earnings growth of roughly 59%. Over the last three years, average annual EPS growth has come in at 32%.
Wall Street sees Paylocity continuing to post double-digit EPS growth in fiscal 2023, ending in June, and in FY 2024.
On the sales front, Paylocity posted a 37% revenue increase last quarter. Growth has averaged a respectable 20% over the last three years.
PCTY Stock Builds Handle In Market Correction
The market indexes have not been kind to tech names like AAPL stock this year. But Paylocity and Nasdaq have fared better than most, Like NDAQ, PCTY stock continues to work on a handle as a market correction takes hold.
In a sign of rebounding strength, Paylocity's 50-day moving average has moved above its 200-day line. The 21-day line, which PCTY stock has been testing for more than a month, is also trending higher.
The stock's relative strength line is approaching a new high as well, in a sign of unusual leadership in this tough stock market environment.
While it's risky to buy stocks in a market downtrend, investors should keep a close eye on PCTY stock. Paylocity could be setting up a new run that unfolds as soon as market tone improves.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
