The folks at Paylocity Holding must be thinking, "About time!" Paylocity stock's Relative Strength (RS) Rating headed into a higher percentile Tuesday, as it got a lift from 65 to 75 after the company last week reported healthy earnings growth. Its other key ratings were already high, in the 90s — including a best-possible 99 Earnings Per Share Rating — and it continues to put up outstanding profit and sales growth numbers.
On Feb. 3 Paylocity reported a 75% jump in earnings per share to $1.12 on 39% higher revenue, to $273 million. It was the fourth straight double-digit profit hike, and the largest in the last four quarters. Sales growth has been similarly strong, in the 30%-plus range over that period.
Paylocity Stock Knocking On Best Stocks Club Door
So why is its stock Relative Strength Rating a good but not great 75? One reason is that tech stocks took an outsize beating last year compared to other sectors, and software companies were among the hardest hit. Chicago-area based Paylocity is a cloud-based provider of payroll and HR management software.
However, the 75 RS Rating puts Paylocity stock just a few points below the benchmark for the best stocks to buy and watch. Market research reveals that the biggest stock winners typically have an 80 or better RS Rating in the early stages of their moves. Investors will look to see if Paylocity can continue to rebound and clear that threshold.
In addition to its 75 RS Rating and 99 EPS Rating Paylocity has a 97 Composite Rating. The IBD Composite Rating helps investors easily measure the quality of a stock's fundamental and technical metrics. The best growth stocks have a Composite Rating of 90 or better. In a sign of real strength though, Paylocity has a best-possible A+ Accumulation/Distribution Rating on an A+ to E scale with A+ superb and E lousy. The A+ rating shows that funds such as ETFs and mutual funds are loading up on Paylocity.
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Shares Surged 6.7% Tuesday
Paylocity stock shot up 6.7% Tuesday to 232.89. The stock is not near a proper buy zone right now, though it could be forming the right side of a cup base. See if it is able to form and break out of a proper consolidation in strong volume.
Paylocity stock holds the No. 4 rank among its peers in the Computer Software-Enterprise industry group. Model N and Manhattan Associates are also among the group's highest-rated stocks.
IBD's proprietary Relative Strength Rating tracks market leadership by using a 1 (worst) to 99 (best) score that shows how a stock's price performance over the trailing 52 weeks compares to the rest of the market.
