We recently published a list of 10 Best Human Resources Stocks To Invest In. In this article, we are going to take a look at where Automatic Data Processing, Inc. (NASDAQ:ADP) stands against other best human resources stocks to invest in.
The US Job Market: At a Glance
According to a report by Reuters on January 23, the number of citizens in the United States applying for unemployment benefits rose slightly during the week before the release of this report. The subtle change emphasized no decline in labor market conditions. In addition to that, the report highlighted that while layoffs were particularly low, the opportunities available to people finding new jobs remained scarce and limited.
The Labor Department reported that the jobless rolls surged to the highest level in over three years during early January. For the week ended January 18, claims for state unemployment benefits increased by 6,000 to reach 223,000. On the contrary, economists polled by Reuters were expecting claims to reach 220,00. The gap can be explained by a surge in claims after the wildfires occurred in Los Angeles, with undocumented claims being even higher.
More recently, on February 5, Reuters reported that job openings fell by the most in 14 months in December 2024 but the relatively stable hiring situation pointed towards a steady labor market. The Labor Department’s Job Openings and Labor Turnover Survey suggested that for every unemployed person, there were 1.1 job openings available in December, down from 1.15 in November 2024. While this does put a serious question mark on the Fed’s easing cycle, it also raises concerns over the stability of the US economy and its future.
By the last day of December, job openings fell by 556,000 to reach 7.6 million, the largest decline since October 2023. The decline in job openings points towards uncertainty around the new administration’s policies and a general lack of confidence, especially with incoming decisions like mass deportations and broad tariffs, leaving businesses more cautious than ever. In addition to that, policymakers are also extremely cautious, given that they believe most policies are inflationary, reducing the chances of an easing cycle being continued as planned.
With the growing need for job opportunities, the demand for human resource companies and experts is at an all-time high.
Our Methodology
To come up with the names with sifted through multiple rankings available on the internet, and compiled a list of stocks in the industry. We then selected the following human resources stocks based on the hedge fund sentiment toward each stock as of Q3 2024 and picked the most popular ones. The list is arranged in ascending order of the number of hedge fund holders in each firm.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
HR management team reviewing resumes on a computer.
Automatic Data Processing, Inc. (NASDAQ:ADP)
Number of Hedge Fund Holders: 49
Automatic Data Processing, Inc. (NASDAQ:ADP) ranks third on our list of the best human resources stocks to invest in. ADP is a management service company that provides human resources management services, tax services, online payroll services, and tax solutions. The company provides recruiting and hiring services, talent management services, activation services, retirement plans, and workers’ compensation services. ADP has as its mission to optimize operations for businesses such that forecasting budgeting, and scheduling become extremely simple.
The company recently released results for its fiscal second quarter of 2025. By the end of the quarter, Automatic Data Processing, Inc. (NASDAQ:ADP) had more than 1.1 million clients across 140 countries, managed by nearly 64,000 global ADP associates. The company also now delivers payroll for more than 42 million workers across the globe. During the quarter, ADP generated $19.2 billion in revenue, up from $15 billion in the fiscal year 2021.
As of now, the company’s total addressable market stands at $175 billion, and expects its market to grow by 5-6% in the fiscal year 2025 and beyond. This explains why hedge funds were bullish on the stock, given that 49 hedge funds held stakes in ADP at the close of Q3 2024.
Overall, ADP ranks 3rd on our list of best human resources stocks to invest in. While we acknowledge the potential of ADP to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ADP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
Hedge Fund Resource Center