Q–I bought 200 shares of Paychex Inc., which have since dropped in value. What’s your opinion? Should I hold or sell?
A–If you stick with Paychex, the second-largest U.S. payroll accounting firm after Automatic Data Processing, it could ultimately boost your own family’s payroll.
Its businesses seem to keep on growing.
The stock currently rates a consensus “buy” from the Wall Street analysts who follow it, according to Charles Hill, director of research for the First Call Corp. research firm in Boston. That includes three strong buys, three buys and four neutral recommendations.
In addition, a total of 183 mutual funds recently held Paychex stock in their portfolios. The largest amounts were held by T. Rowe Price New Horizons, American Century Ultra Investors and Stein Roe Capital Opportunities, each of which had 1 million or more shares of it.
Expected earnings growth for the Paychex fiscal year beginning May 1997 is 32 percent, with expected growth for the following year pegged at 26 percent, according to First Call. It has beaten analyst expectations for each of the first three quarters of this fiscal year. During those nine months, net income rose 36 percent to $54.4 million, or 76 cents a share, while total revenues jumped 31 percent to $531 million.
Based on what it termed a “positive outlook,” Paychex’s board recently declared a 3-for-2 stock split, payable May 29, 1997, to shareholders of record May 8, 1997. This aggressive company last year completed a merger with National Business Solutions Inc. of St. Petersburg, Fla., and an acquisition of Olsen Computer Systems Inc. of Santa Ana, Calif.
Paychex also provides automatic tax payment, direct deposit, a check-signing, envelope-inserting, software for payroll reporting, employee handbooks and group insurance management.
Q–I’d like to know if my money could be working harder for me and could use your personal finance help. My individual retirement account includes 110 shares of Alliance Quasar Fund. What’s your opinion of that fund? It is just one of a number of investments that I have.
A–It’s been a stellar performer in a category in which most of the competitors have really gotten whacked lately. So long as you’re diversified in your holdings, as you mentioned, it does make sense to have some stocks of smaller to midsize companies.
The $452 million asset Alliance Quasar Fund is up 10 percent over the past 12 months to rank in the upper 9 percent of all small-company growth funds. Its three-year annualized return is 23 percent, impressively placing it in the top 1 percent of its peers.
“It’s a good fund compared to just about any group, but it has benefited lately by avoiding the small-cap growth stocks that have gotten hit the hardest,” said Russel Kinnel, equity fund editor for the Morningstar Mutual Funds investment advisory. “Portfolio manager Randall Haase will buy diverse industries and isn’t just a pure health-care/technology investor.”
Because the fund has had its ups and downs over the years, it’s not for the squeamish investor. Just compare its dramatic 48 percent increase in 1995 to its disappointing 7 percent decline in 1994.
In a portfolio that emphasizes basic industries and consumer services, the fund’s largest holdings recently consisted of the stock of Nine West Group, Team Rental Group, OMI Corp., Mohawk Industries, Evergreen Media Corp., Suburban Lodges of America, Knightsbridge Tankers Ltd., Parker Drilling, Bethlehem Steel and Harmon International Industries.
Q–I have a question regarding Social Security and my husband and myself. When a husband retires and his wife retires later, does the wife draw half of what the husband draws?
A–If you were a non-working spouse retiring at age 65, you’d receive 50 percent of what your husband’s full primary benefit would be if he retired at age 65. That benefit is permanently reduced if you take it before age 65, with a reduction of 1/144th for each month the benefit is taken before 65.
If you were a working spouse, however, you’ll receive either your own primary benefit or the 50 percent of your husband’s benefit, whichever is greater. When you apply for retirement benefits, a Social Security representative can tell you whether you’ll get a higher payment on your own record or on your husband’s.
“Nowadays, most women who have been working many years of their life end up getting more on their own than they get as spouse’s benefits,” noted Tom Margenau of the Social Security Administration in Baltimore.
Three million people currently receive spouses’ retirement benefits from Social Security, according to Margenau. Times are changing, however, for today nearly 60 percent of all women are in the nation’s work force.
———-
Andrew Leckey, who co-anchors the two-hour “Today’s Business” program each weekday morning on the CNBC cable television network, answers questions only through the column. Address inquiries to Andrew Leckey, “Successful Investing,” Suite 367, 76 N. Maple Ave., Ridgewood, N.J. 07450 or by e-mail at successinv@aol.com.
