$ADP - Automatic Data Processing
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"The cash monster"
The secrets of $ADP for stability and profitability in volatile markets.
Special post!
When people think about the American stock market, they tend to imagine the big names:
Apple, Nvidia, Tesla...
But there are quiet, stable companies that generate earnings year after year — without noise, without headlines...
Meet - AUTOMATIC DATA PROCESSING ($ADP)
The giant company that manages payroll, deductions, deposits, insurance, benefits for millions of employees – and even the clock that measures when you arrived at work!
It is quiet, almost invisible – and controls one of the most sensitive things there is...
The salary of most US citizens!
ADP does not produce products, it manages people.
The company provides payroll management, human resources, employee attendance, regulation, and more services – to over 1,000,000 businesses worldwide!
So how did it become one of the most stable SaaS companies in the US?
1. "Heavy" clients with very low churn rates:
When a business switches to ADP, it's like a wedding with a complex technical contract...
Switching to competitors becomes a complicated and expensive business, so clients simply stay.
And if a recession hits?
$ADP continues to charge its clients as usual...
2. Super stable business model:
ADP charges fees per employee. This means that as the number of employees in the economy grows, so do its revenues.
This creates a situation where $ADP's revenues run like clockwork.
And now - pay attention - read the following section very carefully!
Now that you understand ADP's business - managing the salaries of millions of employees, you will understand what ADP does to earn huge sums "on the side"...
The company not only manages the pay stubs - but actually distributes the salaries for the employees!
That is - the salary passes through $ADP to the employees' bank accounts.
In a brilliant move - $ADP turned itself into a bank!
Before each payroll payment, when the money first passes through ADP - it holds it itself – sometimes for a few days – and invests it in short-term interest rates.
In 2023, earnings from this method alone were over $900 million!
3. Operating profit of over 25% -
Thanks to automation, a strong brand, and digital services, ADP succeeds in generating high operating profits – even without the need for mass recruitment or aggressive marketing.
The company also distributes a dividend of almost 2% per year with consistent growth for over 50 years!
Bonus fact: $ADP stock has risen by more than 135% in the last five years – and all this without being in a "hot sector".