Paylocity Hits 52-Week High on SaaS Services & Better Sales

An image of a pen pointing at a stock chart Credit: Shutterstock photo

Shares of Paylocity Holding CorporationPCTY rallied to a new 52-week high of $80.96, eventually closing a tad lower at $80.27 on Aug 30.

Notably, the stock has been witnessing an upside, appreciating 70.2% year to date compared with the industry 's rally of 27.3%.

The company is benefiting from broker referrals, which drive sales activity. This is evident from its recently reported fourth-quarter fiscal 2018 results, wherein revenues from broker referrals constituted more than 25% of new business revenues for fiscal 2018.

We note that the company has beaten the Zacks Consensus Estimate in three of the trailing four quarters, delivering an average positive surprise of 18%.

Paylocity currently has a Zacks Rank #2 (Buy). It has a market cap of $4.24 billion and a long-term expected earnings growth rate of 22%.

What's Backing the Rally?

Paylocity is benefiting from its expanding sales force. The company has increased its sales force by 21% in fiscal 2018. This has boosted investor confidence as it is expected to be incremental to revenues, going forward.

Notably, the company recently launched an integration marketplace to enable clients to quickly review more than 300 integration partners and capabilities across various Human Capital Management (HCM) functions. The addition of the marketplace further strengthened Paylocity's commitment to provide superior client-experience, potentially resulting in increased client additions and driving growth.

Paylocity's continued investment in SaaS technology and mobile applications is also making its prospects promising. In the last few quarters, a significant portion of revenues was generated from clients moving from traditional payroll service providers to the company's SaaS-based services.

According to Gartner, the global SaaS market is expected to witness a four-year compound annual growth rate (2017-2021) of 18.1%. These statistics along with the company's SaaS-based applications are making investors optimistic.

The company is gaining market share over the most critical client demand area of HCM, which in turn, continues to support growth.

Moreover, Paylocity's work-culture was recently acknowledged by a chain of company-rating platforms. It was declared as one of the best places to work by Crain, Forbes and Glassdoor. This has strengthened clients' confidence in the company further.

Other Stocks to Consider

Few other top-ranked stocks in the broader Computer and Technology sector are Virtusa Corporation VRTU , Qualys, Inc. QLYS and Fortinet, Inc. FTNT , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Long-term earnings growth for Virtusa, Qualys and Fortinet is projected to be 20%, 8% and 16.8%, respectively.

5 Companies Verge on Apple-Like Run

Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2018 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs. A bonus Zacks Special Report names this breakthrough and the 5 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains.

Click to see them right now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Fortinet, Inc. (FTNT): Free Stock Analysis Report

Paylocity Holding Corporation (PCTY): Free Stock Analysis Report

Qualys, Inc. (QLYS): Free Stock Analysis Report

Virtusa Corporation (VRTU): Free Stock Analysis Report

To read this article on click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.