Sunday, November 17, 2013

"With all of the confusion over the Affordable Care Act deployment and a steady rise in employment, a company like ADP should do well in 2014"

Dow Jones Industrial Average 15,962.00 (UP) Week ending 11-15-2013
Dow Jones Industrial Average 15,761.78 (UP) Week ending 11-08-2013

 .... and up and up we go! I got skittish and sold my MasterCard (MA) stock at the nosebleed price of 692.00. It closed on Friday NOV 15th at 752.00 per share. Such is the meddle of this market.

Federal Government liquidity and speculation money combined with very healthy company balance sheets provide a powerful tonic to keep this stock market ascent going.

I tried to stand back and look at this whole Affordable Care Act process and what businesses may benefit from the attempt to organize this whole "collection of the premiums" process for it and how it will all work. I thought of two companies that are experts in this area Automatic Data Processing Inc. (Symbol ADP) and Paychex (symbol PAYX). I decided that for total return, ADP would be a better investment at this time for the next two years.

Automatic Data Processing Inc., (Symbol ADP, $77.33, was $75.21 when I started this article last week,) is in very good position to benefit from these developments.
ADP has just recently increased their dividend by 10% to a 2.5% dividend yield, always a good sign of a healthy company. The company has a 5 year expected PEG ratio of 2.57 and a Return on Equity of 22.27%.

Earnings per share for 2013 is looking like $3.17 per share and for 2014 earnings are projected at $3.50 per share. The company has 0% long term debt and the insider's purchasing looks favorable.

The company did 11.5 Billion in Revenues last year and currently has a Price to Earnings Ratio, (PE) of 21.67.

Automatic Data Processing stock price is up 37.25 percent over the trailing 12 months. (TTM). ADP year over year quarterly growth is  7.70%. Investor's Business Daily EPS rank for ADP is 65, so very favorable.

The stock is fairly valued at this price, so, perhaps, look for a tax time sell-off correction to jump in and pick some up.  Everything looks fairly valued with the Dow at 15.962, but I think this is still a good Total-Return story for you for the next two years.

I like the actual shares of stock on paper with their great lithographs. I don't know if people hold stocks long enough to actually receive the stock certificates, but they are wonderful works of art.

So, I hope you get to keep your health insurance policy and your doctor. It's going to be fun getting this thing all working right.  I hope the people that actually needed the help getting insurance are served by this ACA plan.

Peace,  Freewilly

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