Jim Cramer is Watching These 8 Stocks

4. Paychex, Inc. (NASDAQ:PAYX)

Number of Hedge Fund Holders: 20

Cramer expressed fondness for Paychex, Inc. (NASDAQ:PAYX) and discussed its acquisition of Paycor HCM, Inc.

“Then a little later on Tuesday morning, Cramer fave Paychex, the payroll processor and payer and provider of outsourced human capital management solutions, announced that it’s acquiring rival software vendor Paycor HCM for $4.1 billion. I like this Paycor. Again, they’re rolling up the human capital management software space and Paycor gives them additional scale to broaden their offerings… Looking at the transactions we’ve seen just this week, while some of them likely would’ve been challenged by Biden’s ideologically driven regulators, most of them seem pretty justifiable. All of them make great business sense…

Paychex is also gaining scale in the industry with the Paycor HCM deal. I suspect that Biden administrators, this one could draw some antitrust attention. They’re going to take a good hard look at this deal, but I can’t see why this kind of takeover should be blocked.”

Paychex (NASDAQ:PAYX) is a provider of integrated human capital management solutions, offering services such as payroll, HR, benefits, insurance, and retirement plan administration, primarily targeting small to medium-sized businesses. On January 7, the company announced a definitive agreement to acquire Paycor HCM, Inc. in an all-cash transaction valued at $4.1 billion, or $22.50 per share.

According to CEO John Gibson, the acquisition of Paycor is complementary to Paychex’s offerings and will add to the company’s capabilities in serving larger businesses, expand its suite of AI-driven HR technology, and create new opportunities for long-term growth. The acquisition marks the largest deal for the company and the transaction is expected to close in the first half of 2025.

Paychex (NASDAQ:PAYX) expects that the deal will generate run-rate cost synergies exceeding $80 million in the near term, with significant potential for revenue synergies over the following years. While the acquisition is expected to be neutral to slightly accretive to adjusted diluted earnings per share in the first fiscal year after closing, it is anticipated to become accretive in the second fiscal year and beyond.