Australia’s employment rate is back on the rebound as the economy continues its post-pandemic economic recovery.
As businesses look to hire while keeping a close eye on their bottom lines, demand for cost-effective business services is growing – creating strong tailwinds for payroll service provider PayGroup (ASX: PYG).
“Paying people properly, compliantly, professionally, and on-time is a big problem in Australia, especially in small businesses and franchise systems. They will professionalise the service,” said Stephen Scott, Senior Portfolio Manager from K2 Asset Management, who pointed out PayGroup as one of his top picks for post-pandemic investment.
PayGroup has experienced “terrific momentum,” according to Managing Director Mark Samlal, who said the company signed a record number of contracts last year.
“We continue to focus on where we understand our best value to be – compliant, trusted payroll solutions with over 95% retention rate,” said Mr Samlal.
According to Mr Scott, PayGroup is experiencing a “valuation gap” and thus continues to be ripe for investment.
“They occupy commanding heights in terms of their role within business, they’ve got good reference customers, and interestingly enough their market cap is relatively low compared to other software businesses,” he said.
Having recently raised some capital and making some “brave” acquisitions that showed “a degree of vision” last year, Mr Scott expects the market to expand from the current levels.
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