5 Best Human Resources Stocks To Buy Today

In this article, we discuss 5 best human resources stocks to buy. If you want to read our detailed discussion on the human resources industry, head over to 11 Best Human Resources Stocks To Buy Now.

5. Paychex, Inc. (NASDAQ:PAYX)

Number of Hedge Fund Holders: 41

Focused on small and medium sized businesses, Paychex, Inc. (NASDAQ:PAYX) offers human capital solutions in the United States, India, and Europe. The company provides a one-stop solution to integrate different human resource processes, be it payroll, recruitment, or performance evaluation. Furthermore, the company provides consultancy services for regulatory compliance and strategic planning to exceed organizational needs. On July 13, Paychex, Inc. (NASDAQ:PAYX) declared a $0.89 per share quarterly dividend, in line with previous. The dividend is payable on August 24, to shareholders of record as of August 10. 

According to Insider Monkey’s first quarter database, 41 hedge funds were bullish on Paychex, Inc. (NASDAQ:PAYX). In comparison, 47 funds held a stake in the company in the prior quarter. Select Equity Group held the largest position in the company, with 2.1 million shares worth over $244 million. 

4. Paycom Software, Inc. (NYSE:PAYC)

Number of Hedge Fund Holders: 48

Paycom Software, Inc. (NYSE:PAYC) specializes in providing a digital, cloud-based solution to organizational human resource processes. The company is regarded as one of the first fully online human resource services that provides software to manage the employment lifecycle. This includes managing potential candidates, employee wages, taxation, and performance appraisals. In a research note dated June 28, analyst Matthew Pfau from investment firm William Blair said he expects Paycom Software, Inc. (NYSE:PAYC)’s revenue to grow by 20% over the next few years. The primary reason for this, he commented, is the strength of the software solutions, coupled with the right operational execution of the company.

According to Insider Monkey’s first quarter database, 48 hedge funds were bullish on Paycom Software, Inc. (NYSE:PAYC). Greg Poole’s Echo Street Capital Management held the largest position in the company, comprising 646,879 shares valued at $196.6 million. 

Polen Global SMID Company Growth Strategy made the following comment about Paycom Software, Inc. (NYSE:PAYC) in its Q4 2022 investor letter:

Paycom Software, Inc. (NYSE:PAYC), a high quality, high-growth leader in human capital management and payroll software, was the largest single detractor from returns over the quarter, reversing some of the gains it made in Q3. The company posted strong third-quarter results, with revenue and earnings ahead of expectations. However, concerns over a Global recession and a weaker US employment market weighed heavily on the share price. The company continues to take market share from long-standing incumbents. We believe the business has a long runway with only approximately 5% market share and a growing total addressable market.”

3. Automatic Data Processing, Inc. (NASDAQ:ADP)

Number of Hedge Fund Holders: 53

Automatic Data Processing, Inc. (NASDAQ:ADP) primarily focuses on two major segments – Employer Services and Professional Employer Organization. The company uses its cloud-based platform to provide solutions for human capital management. Within the first segment, services include talent recruitment, payroll, workforce management and administration, using the online platform. In contrast, the second segment mainly comprises outsourcing solutions for all business needs on a co-employment model. On July 26, Automatic Data Processing, Inc. (NASDAQ:ADP) reported a FQ4 non-GAAP EPS of $1.89 and a revenue of $4.5 billion, topping market consensus by $0.06 and $110 million, respectively. 

According to Insider Monkey’s first quarter database, 53 hedge funds were bullish on Automatic Data Processing, Inc. (NASDAQ:ADP). In contrast, the previous quarter saw 49 hedge funds holding a similar position. Terry Smith’s Fundsmith LLP held the largest stake in the company, comprising 5.5 million shares worth $1.2 billion. 

Madison Sustainable Equity Fund made the following comment about Automatic Data Processing, Inc. (NASDAQ:ADP) in its Q1 2023 investor letter:

“We eliminated Automatic Data Processing, Inc. (NASDAQ:ADP) from the portfolio due to concerns that the economy is close to a peak job market and interest income on the company’s float has also peaked along with interest rates. The company’s valuation does not reflect the potential downside in the job market from a weakening economy.”

2. Workday, Inc. (NASDAQ:WDAY)

Number of Hedge Fund Holders: 86

Workday, Inc. (NASDAQ:WDAY) is an international provider of cloud-based solutions to a plethora of business needs, stretching from financial management to human resource management. Be it managing receivables or payables, implementing internal controls, or streamlining supplier engagement, Workday, Inc. (NASDAQ:WDAY) enables an ecosystem for cross-sectional teams to increase productivity. In June 2023, the company saw an increase in share price following RBC Capital Markets’ coverage for the stock. Analyst Rishi Jaluria expects the company to grow up to 20% in the coming years, given how its platform is replacing conventional solutions. With AI improving, the market is expected to grow for such platforms, added the analyst. 

According to Insider Monkey’s first quarter database, a total of 86 hedge funds were bullish on Workday, Inc. (NASDAQ:WDAY), as opposed to 83 funds in the prior quarter. Stephen Mandel’s Lone Pine Capital held the largest position in the company, with 4.2 million shares worth over $881 million.

This is what RiverPark Large Growth Fund has to say about Workday, Inc. (NYSE:WDAY) in its Q3 2022 investor letter:

“We also added a small position in Workday this quarter, taking advantage of its 2022 price decline. WDAY is a leading SaaS software solutions provider with two key subparts: Workday HCM offering end-to-end software for human resource departments, and Workday Financial Management for planning, spending, auditing, analytics, and reporting. The company sells to more than 9,500 medium-sized through enterprise customers across more than 175 countries, including more than 50% of the Fortune 500.

The company is benefitting from the secular shift to digitization for businesses and despite its 21% annual subscription revenue CAGR over the past 2 years (with 95%+ gross revenue retention), Workday still has less than 5% penetration of its $105 billion TAM. We believe the company can grow its top-line high-teens over the long-term, while continuing to improve margins (non-GAAP gross operating margin expanded 900 basis points to 22.4% over the past two years), leading to approximately 30% EPS growth for the foreseeable future. The company also requires limited capital expenditures, producing significant and growing FCF ($1.4b last year, up 37% year over year), which WDAY has used for acquisitions and debt repayment.”

1. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 289

Microsoft Corporation (NASDAQ:MSFT) provides innovative software solutions, be it gaming, coding, computing, or cloud-based solutions. In June 2016, the company announced the acquisition of LinkedIn for around $26.2 billion. Over the years, LinkedIn has been able to connect companies and personnel globally. Be it staffing, industry news, or professional development, the platform has added tremendous value in promoting human capital. As of May 2023, the platform has over 930 million members. 

Recently, Meta Platforms, Inc. (NASDAQ:META) announced a collaborative venture with Microsoft Corporation (NASDAQ:MSFT) to launch an open source language model, Llama 2. Moreover, Microsoft Corporation (NASDAQ:MSFT) also set a monthly price of $30 for its AI tool, Copilot. Morgan Stanley analyst Keith Weiss commented on July 6 that he expects AI developments to boost the valuation for Microsoft Corporation (NASDAQ:MSFT) to over $3.1 trillion.

According to Insider Monkey’s first quarter database, Bill & Melinda Gates Foundation Trust held the largest position in Microsoft Corporation (NASDAQ:MSFT), with 39.2 million shares worth in excess of $11.3 billion. Overall, 289 hedge funds were bullish on the stock during the March quarter. 

The Ithaka Group had this to say about Microsoft Corporation (NASDAQ:MSFT) in its second quarter 2023 investor letter:

“Microsoft Corporation (NASDAQ:MSFT) builds best-in-class platforms and provides services that help drive small business productivity, large business competitiveness, and public-sector efficiency. Microsoft’s products include operating systems, cross-device productivity applications, server applications, software development tools, video games, and business-solution applications. The company also designs, manufactures, and sells devices, including PCs, tablets, and gaming/entertainment consoles that all integrate with Azure, its cloud computing service. In the quarter Microsoft’s stock appreciated on the back of excitement surrounding the company’s positioning in the generative AI market and its ability to monetize the coming wave of corporate investment in supercomputing and AI.”

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