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Paychex set to rally on income boost

Shares of Paychex Inc. are poised to outpace the broader market as the prospect of higher interest rates and more job creation will buoy the payroll-service provider.

By Anna-Louise Jackson and Anthony Feld | Updated on March 04, 2014

March 4 (Bloomberg) — Shares of Paychex Inc. are poised to outpace the broader market as the prospect of higher interest rates and more job creation will buoy the payroll-service provider.

The company generates income from the interest earned on money it holds for clients, a so-called float, so rising Treasuries yields are “pure gravy” to its net income, said David Yucius, who oversees $250 million in assets as president of Aurora Investment Counsel Inc. in Atlanta. Paychex stock has lagged behind the Standard & Poor’s 500 Index, amid a backdrop of low rates and slow job growth for small- to medium-sized business in the past five years, he said.

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