"Administaff (NYSE: ASF), our latest featured buy. offers personnel management services to small and medium-sized businesses," says Charles Mizrahi in Hidden Values Alert.
"The company is a professional employer organization (PEO) ; its offers a broad range of services, including benefits and payroll administration, health and workers’ compensation insurance programs, personnel records management, and employee training.
"It also performs record-keeping services for defined contribution plans and offers a website for human resource products, services and information, as well as small-business software applications.
"Its system is designed to improve the productivity and profitability of small and medium-sized businesses. It relieves business owners and key executives of many employer-related administrative and regulatory burdens, which enables them to focus on the core competencies of their businesses.
"As of December 31, 2008, the company had 51 sales offices in 24 markets. Its long-term strategy is to operate approximately 90 sales offices in 40 strategically selected markets.
"The company has no long term debt and has been buying back its stock. ASF’s competitive advantage is high switching costs, which result in long-term client retention. The company generated over $91 million in free cash flow in 2008.
"Overall, ASF is a well-run business, and a price of $20 or lower per share represents a very good value. If ASF can grow earnings at only 8% per annum and maintain a P/E of 12, the stock will handsomely reward investors during the next five years."
