The company also issued guidance for FY13, and it expects an increase in total revenue and EPS by ~5% each. Seeing the decreasing unemployment rate, this guidance seems to be achievable. It is estimated to go down further to ~7% in 2013, which will in-turn help the employer services segment of the company. Along with that, the company’s new products like Vantage HCM, Workforce NOW ver. 4.0, etc., are in place to increase its market share. Vantage HCM has a broader suite of services in its unified database, including benefits of administration, time & labor management, talent management, and HR & recruiting features. It is already implemented by around 10 clients, sold to 30 others, and by the end of FY13 it will be released with a global system of records. The Workforce ver. 4.0 is built from a unified database and offers a broad product suite. The company intends to migrate its legacy major account customers on to Workforce Now over the next two years. The company can keep-up with the increasing employment in the US with the help of these products. Overall, I am optimistic about ADP and I feel that the new products will help the company increase its customer base.
Wal-Mart Stores, Inc.
How do you grow bigger than the biggest? Well, if you are Wal-Mart you can definitely not lose that position in the first place. The world’s largest retailer is going big, again, as it recently announced its plans for expansion in Canada. It is safe to say that the move is a reply to Target Corporation (NYSE:TGT)‘s expansion plans in the region. Recently Target announced it will move north and open ~125 stores in Canada starting this March. Wal-Mart is going to invest ~$450 million to build new stores and renovate the old ones. The company is planning to open at least 37 super-centers which will increase its retail space by ~1.4 million square feet. By the end of January 2014 it will operate around 388 stores in Canada. Along with this, the plan includes expansion of its grocery segment in all the stores of the country. Currently, this facility is available only in 50% of its Canadian stores. Grocery allows Wal-Mart to get a competitive edge on Target, which focuses more on clothing and housewares.
Additionally, its consumer electronic business is also solid and growing. Recently at the Consumer Electronic Show it announced its pre-paid plan Straight Talk with the new iPhone 5. This plan includes unlimited talk, text and data for a low cost of $70/month. Availability of iPhone on the pre-paid network is a game changing event for Straight Talk and the pre-paid industry, as the iPhone was responsible for driving consumers to enter post-paid contracts. Looking at this, I feel that its ability to adapt according to the changing market conditions and consumer needs will help the stock to grow.
What’s in for the investors?
Summing up, I can say that the recovery in the US economy has helped all the above mentioned stocks. Increased prices, improving US Housing Market, and products like UltraLight are indicators of the fact that USG will grow. On the other side, the improvement in the US economy has resulted in reduction of the overall unemployment rate in the country and will continue to go down in the future as well. This will assist Automatic Data to increase its business and will provide a good base to its latest initiatives like Vantage HCM and Workforce NOW. The stock seems strong and the company will give a decent performance in the future as well. Finally, Wal-Mart’s expansion plans and innovative business ideas will help its stock to grow the same way it has been growing in the past. I recommend a buy rating for all three stocks.
The article 3 Companies that will Benefit From the Recovering Economy originally appeared on Fool.com and is written by Madhu Dube.
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