5/1/24 - $payc - waiting for a better entry, long comment

2 במאי

5/1/24 - vrockstar - taking a look again post eps 10% drop and can't find the reason to take beyond a trading position if say opens in the mid 150s. why? overhang from the 3Q result (-40%) on BETI remains a PTSD event/ still w/ wait and see, the 4Q result didn't bring much improvement and now 2Q guide is weakish. this isn't unique to the co, so not specifically a concern on the name per se (it's an industry issue that won't be resolved until likely 2H), so now it's a valuation equation. 10% p.a. revenue growth for '24 and '25 is probably the best bogey we have today and while you can have an opinion on higher/ lower and either get ahead/ or stay patient or away... is that worth barely 3% fcf yield, nearly 20x PE and 5x fwd sales? short answer: probably yes. but is this sort of B2B setup unique? short answer: also probably no. so therefore, any leg down in risk assets/ nasdaq is richest - and B2B software hasn't been the first to be rebid (top 5 caps first, then semis next)... a 10% correction in may/june could see something like a 1.5x beta on PAYC and so another 15% lower beyond the 10% dip AH today. this puts FCF yield closer to 3.5%, PE perhaps in the high teens looks more attractive. net cash means buyback potential here too. risk looks better. so while it's on my "would buy list" i'm looking for a greedier entry below $160 to start buying, $150 I get probably 50% size of would-take risk and in the high 140s or below (beyond any one-off/ news related risk off/ though unlikely the case), i'd be at a full size. wanted to drop some thoughts here for myself and have been posting publicly in case it helps anyone else or ideally someone has a more nuanced POV (I look at everything) and we can debate and learn from each other in the comments. stay well.