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(Source: TC2000.com)
Paycom Software and Amazon have little in common. One is a large-cap Enterprise-Software company. The other is a mega-cap Internet-Retail company with a cloud-computing platform, Amazon Web Services. However, two traits that each company shares are market leadership with a wide moat, and incredible compound annual earnings per share growth rates. In PAYC’s case, the company has grown earnings at an astounding compound annual rate of ~64% since FY2014. In AMZN’s case, earnings have grown at 101% compound over the past five years (FY2015). While these growth rates can not persist forever, both companies are expecting to double annual EPS again between FY2020 and FY2023, suggesting that their respective growth stories are far from over. This makes them attractive buy-the-dip candidates, especially since they’ve underperformed some of their peers over the past year, so they are nowhere near as extended from a technical basis. Let’s look at Paycom first:
