3 HCM Stocks to Consider After January's Strong U.S. Jobs Report

Regarding buy the dip targets, investors may want to consider the stocks of several human capital management (HCM) technology solutions providers that are starting to make an argument for being in oversold territory following January’s strong U.S. Jobs report.

Optimistically, the U.S. economy added 130,000 jobs in January, well above the 68,000-75,000 that most economists expected. The unemployment rate was also slightly down to 4.3% compared to expectations of 4.4%.

That said, here are three HCM stocks that may eventually be in store for a sharp rebound in 2026 after last year’s slower jobs growth weighed on investor sentiment, in addition to what has recently been a broader software selloff.

Workday - WDAY

Zacks Rank #2 (Buy)

We’ll start with Workday WDAY, as the popular internet-software compnay had grown in notoriety as the largest global HCM applications vendor.

As a provider of enterprise-level software solutions for financial management and human resource domains, Workday's stock is nearly 50% from its 52-week high of $281 a share. While Workday has experienced slower annual revenue growth, a 12% uptick is still projected in FY26 & FY27, with top line projections edging toward $10 billion.

Starting to make the drop in Workday's stock more mouth-watering, is that annual earnings are expected to increase 24% this year and are forecasted to rise another 16% in FY27 to $10.57 per share. Most enticing, Workday stock is trading at its cheapest forward earnings multiple since becoming profitable at 14X.

Paylocity - PCTY

Zacks Rank #2 (Buy)

Offering cloud-based payroll and HCM software solutions to medium-sized organizations across the United States, Paylocity’s PCTY stock has been cut in half from a one-year high of $218 a share.  

Paylocity has the most affordable stock price on the list, making its single-digit top and bottom line growth more appealing at an attractive 15X forward earnings multiple. Plus, Paylocity recently crushed earnings expectations for its fiscal second quarter last Thursday, with Q2 EPS of $1.85 crushing expectations of $1.57 and climbing 21% from $1.52 per share a year ago.

Automatic Data Processing - ADP

Zacks Rank #3 (Hold)

Rounding out the list is Automatic Data Processing ADP, one of the most diverse providers of HCM technology solutions – including payroll, talent management, HR, and benefits administration, along with time and attendance management to employers around the world.

ADP stock is more than 30% from its 52-week and all-time high of $329 a share. There could be even more distinct buying opportunities ahead, but ADP is trading at a reasonable 20X forward earnings multiple with FY26 and FY27 EPS projected to increase over 9%.

Projections of 5% annual revenue growth are in the forecast for the foreseeable future, with ADP having the most robust financial figures among many of its HCM peers, not only in terms of its top and bottom line but in cash flow and recurring revenue as well.

It’s also noteworthy that the dip in ADP stock is appealing considering the HCM leader is a Dividend King, increasing its dividend for more than 50 consecutive years with a current annual yield of 3.02%.  

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This article originally published on Zacks Investment Research (zacks.com).

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