Automatic Data Processing, Inc.

“ADP is one of the best businesses in payroll and HCM: recurring revenue, high switching costs, strong cash generation, prudent capital returns, and low risk of permanent franchise impairment. However, at roughly 22.6 times trailing earnings and 19.9 times forward earnings, the stock already reflects much of that quality. The likely outcome is continued steady compounding rather than exceptional upside, making the shares attractive to own but not especially attractive to initiate aggressively at the current price.”