2 Reasons to Be Cautious With Paycom
Paycom (NYSE: PAYC), a human capital management and payroll company, rode the tailwinds of a strong labor market to become one of the best-performing cloud stocks during this terrible economic environment. However, investors should be wary about Paycom's outperformance continuing.
Here are two reasons investors should be cautious about investing in Paycom.
Paycom charges its clients monthly on a per-employee basis for services like payroll, which generates most of its recurring revenue. As a result, Paycom's fundamentals are typically at their best during times of a strong economy with a healthy labor market. Alternatively, Paycom's fundamentals will diminish in periods of declining economic activity, marked by high unemployment.
Source Fool.com
