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Automatic Data Processing (NASDAQ:ADP) provides payroll and tax filing services, brokerage services, comprehensive human resource services and financial services to auto and truck dealerships. The company has grown profits and dividends 8-12% over the last 10 years and has earned an 18-20% return on equity. While the 2008-2009 recession impacted ADP somewhat, it did very well relative to other companies. Long term, the company should continue to prosper based:

(1) positive demand for integrated computing outsourcing solutions,

(2) the economic recovery should lead to an increase in hiring as well as greater employee retention both of which contribute to higher revenues,

(3) the contribution from the recent acquisitions [8 in the last year],

(4) a dedicated effort to technological upgrades,

(5) higher interest rates on funds held for clients.

The principal negative for ADP is its sensitivity to rising/falling unemployment levels which will be important if the economy falters.

ADP is rated A++ by Value Line, has only 1% of its capitalization in debt and its stock yields 2.7%.

Statistical Summary

Cook Table

Stock Yield

Dividend Growth Rate

Payout Ratio

# Increases Since 2001

ADP

2.7%

9%

53%

10

IND*

1.1

8

25

NA

Debt/Equity

ROE

EPS Down Since 2001

Net Margin

Value Line Rating

ADP

1%

20%

3

14%

A++

IND*

17

22

NA

10

NA

*IND is the average for the IT Services Industry as complied from Value Line

Chart

Note: ADP stock made steady progress off its March 2009 low, surpassing the down trend off its October 2007 high (straight red line) and the November 2008 trading high (green line). The stock is in a long term trading range (boundaries not visible). However, it is in an intermediate term up trend (purple lines) as well as a short term up trend (brown lines). The red wiggly line is the 30 day moving average. The Dividend Growth Portfolio owns a one half position in ADP by virtue of it having hit its Sell Half Price. Shares would be Bought back at $25. The lower boundary of its Sell Half Range is $53.

click to enlarge

Source: ADP's Stock Price Near 'Sell Half' Range