Wells Fargo’s Best Growth Stocks: 28 Stocks With The Highest Consensus EPS Growth Estimates

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

Consensus Long-Term EPS Growth Estimate: 11%

Number of Hedge Fund Holders: 32

Paycom Software, Inc. (NYSE:PAYC) is a sizable software-as-a-service (SaaS) firm that focuses primarily on businesses’ human resource management needs. Its software provides customers with a wide variety of solutions such as application tracking and background checks. As a result, since its revenue is tied to the labor market, Paycom Software, Inc. (NYSE:PAYC)’s stock has been on a roller coaster in 2024. From the start of the year to the end of October, the shares had lost 18% as investors remained wary of the labor market. However, Paycom Software, Inc. (NYSE:PAYC)’s third-quarter earnings, which saw the firm report $452 million in revenue and beat $447 million in analyst estimates sent the stock soaring by 6%. The firm’s full-year guidance was also nearly in line with estimates, and since the report, Paycom Software, Inc. (NYSE:PAYC)’s shares are up 27.6%. The firm’s revenue is heavily dependent on recurring sources, as it accounted for 98% of revenue in H1 2024. The dependence on recurring revenue means that Paycom Software, Inc. (NYSE:PAYC) can rely on customer loyalty provided it continues to meet expectations.

Polen Capital mentioned Paycom Software, Inc. (NYSE:PAYC) in its Q3 2024 investor letter. Here is what the fund said:

“We added to several existing positions in the quarter including Adobe, Workday, Shopify, MSCI, and Paycom Software, Inc. (NYSE:PAYC). Finally, we modestly added to our small position in Paycom Software, given our view that the growth slowdown the company is still experiencing is due to temporary dynamics, and growth should reaccelerate with normal blocking and tackling around product development and salesforce training. While macroeconomic headwinds and lower float income (due to lower interest rates) will be a challenge, we believe Paycom remains an advantaged payroll/human capital management (“HCM”) software player with a long runway for growth ahead.”