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Paychex (PAYX) provides payroll and human resource services to small businesses. The company has posted 17 straight years of revenue and earnings growth. In FQ1'08, sales were up 10% to $507 million as the company earned $0.40/share. Payroll revenues rose 8% for FQ1'08 and should rise 9-10% overall this year. Human resource services offer even more potential - revenues rose 20% this past quarter to $113.3M, with 20%-23% growth expected for 2008. Same-city clientele growth — mostly through positive word-of-mouth — portends a profitable future. Paychex has no debt, regularly raises dividends (75% of this year's income will go to investors) and buys back shares (a new $1 billion buyback is planned for 2008.) But shares have recently faltered from a high of $46 to $41 because of the buyback's impact on investment income, Fed rate cuts diminishing profits from client funds held for payroll, an FQ1'08 miss of some overeager analyst projections, and a slightly lowered 2008 profit projection (from 15% growth to 13%.) But 13% growth denotes $1.58/EPS, up from F2007's $1.41/EPS, and Barron's thinks the 26 P/E is reasonable considering Paychex's growth prospects. Barron's sees PAYX recovering to $46 by 2008 and even $50 by mid-2009.

Sources: Barron's Commentary: 23 Safe Dividend Stocks For Trying TimesUnlucky Number Seven: Sideways Performers Since 2000 Who Stand To Gain Stocks/ETFs to watch: Paychex (PAYX) Conference call transcripts: Paychex F1Q08 (Qtr End 8/31/07) Earnings Call Transcript

Source: Paychex: A Value and Growth Opportunity - Barron's