NEW BULLISH Plays
Paylocity Holding Corp. - PCTY - close: 33.97 change: +0.62
Stop Loss: 31.45
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on May -- at $---.--
Listed on May 28, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 206 thousand
New Positions: Yes, see below
PCTY is delivering strong double-digit revenue growth and has consistently been raising guidance. This has pushed shares to new highs this year.
PCTY is in the technology sector. According to the company,
"Paylocity is a provider of cloud-based payroll and human capital management, or HCM, software solutions for medium-sized organizations. Paylocity's comprehensive and easy-to-use solutions enable its clients to manage their workforces more effectively. Paylocity's solutions help drive strategic human capital decision-making and improve employee engagement by enhancing the human resource, payroll and finance capabilities of its clients."
Back in November they reported their 2015 Q1 results that beat estimates on both the top and bottom line. Revenues were up +38.8% from a year ago. Management raised guidance.
PCTY delivered a similar performance in February. The company reported its Q2 results that beat Wall Street's estimates on both the top and bottom line. Revenues were up +54.9% and managed raised guidance.
Their most recent report was May 7th. You can see the stock's big reaction on the daily chart (likely a short squeeze). Analysts were expecting a profit of $0.05 on revenues of $44.5 million. PCTY delivered $0.11 per share with revenues up +40% to $47.3 million. This time management raised their Q4 revenue guidance above analysts' estimates.
Technically the stock has spent the last several days building a bull-flag consolidation pattern. Today's display of relative strength looks like a breakout from the flag. The point & figure chart is forecasting at $53.00 target. If this rally continues PCTY could see some short covering. The most recent data listed short interest at 12% of the 15.47 million share float.
Bears could argue that PCTY is near the top of its long-term bullish channel (see weekly chart). This would suggest that short-term upside would be limited to a couple of dollars.
NOTE: PCTY does have options but the spreads look too wide to trade them.
Trigger @ $34.15
- Suggested Positions -
Buy PCTY stock @ $34.15
Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.