The market, a capricious mistress, has lately been in a mood to discard her favorites. A sell-off, you understand, is merely a polite term for a collective shudder, a realization that even the most meticulously constructed illusions of prosperity are, well, illusions. Many a tech stock now languishes, haunted by the specter of artificial intelligence – a disruptive force, they say. As if disruption weren’t the market’s natural state! And it’s not merely the silicon valleys trembling; even the stolid financial districts feel a chill. A curious contagion, this fear.
However, amidst this general disquiet, three names appear unduly punished, cast down from grace with a severity that even I, a humble observer of these financial dramas, find excessive. Let us consider, then, Automatic Data Processing (ADP +1.02%), American Water Works (AWK +4.04%), and PayPal Holdings (PYPL +3.11%). They are not immune to the prevailing winds, no, but their falls… they smack of something more than mere market correction. A touch of the absurd, perhaps?
1. ADP: A Kingdom Crumbling, or Merely Dormant?
Automatic Data Processing, or ADP, as the unimaginative abbreviate it, is a name synonymous with payroll. Generations have toiled, and been compensated (more or less accurately), thanks to this institution. A Dividend King, they proclaim – over fifty years of consistent payouts! A remarkable feat, certainly, if one considers the sheer number of calamities that could have intervened. But even kings fall ill, and ADP now suffers a peculiar malaise. Concerns about growth, you see. As if growth were a natural right, not a fragile blossom requiring constant tending.
The share price has been in decline, despite recent earnings that, while not spectacular, were not disastrous either. The market, it seems, prefers drama. They whisper of AI disrupting employment, and thus ADP’s business. A preposterous notion! As if a machine could truly understand the nuances of human inefficiency. Yet, the pessimism persists. The stock trades at a mere 21 times forward earnings. A pittance, really. If sentiment were to shift – and sentiment, let us remember, is often as fickle as a Moscow winter – a rerating to 25-30 times earnings is not inconceivable. Though, frankly, expecting rationality from the market is akin to expecting a wolf to embrace a lamb.
2. American Water Works: A Merger and the Murky Depths of Regulation
American Water Works, a name that evokes images of pristine reservoirs and… well, water. It has been drifting lower for years, a slow leak in the hull of investor confidence. High interest rates, naturally, are to blame. As if the cost of capital were a force of nature. But there’s more. Concerns about capital expenditures, increased regulatory scrutiny, and, most amusingly, opposition to its planned merger with Essential Utilities (WTRG +2.98%). Apparently, some fear higher rates. As if the price of water were a state secret!
The merger has received shareholder approval, a minor victory in this bureaucratic labyrinth. But regulatory approval remains elusive. If the deal goes through, management promises continued growth of 7-9%. A bold claim, considering the number of forces conspiring to undermine it. Bank of America’s Ross Fowler, a man who clearly enjoys tilting at windmills, has upgraded the stock, predicting a return to a higher valuation. Currently trading at 20 times forward earnings, it once reached 25 times. A modest increase, perhaps, but in this world of shadows, even a flicker of light is welcome.
3. PayPal: A Fallen CEO and the Search for Redemption
PayPal, once the darling of the fintech world, now finds itself in a rather…unpleasant situation. A post-earnings plunge, a CEO change, a drop of nearly 21%. It’s enough to make one question the very nature of progress. The previous CEO, Alex Chriss, launched new products, but failed to reignite growth. A familiar story, really. Ambition, followed by disappointment. The new CEO, Enrique Lores (formerly of HP), inherits a mess. A daunting task, even for a man accustomed to managing complex organizations.
But these declines have driven the valuation to rock bottom. Less than 8 times forward earnings! Compare that to Block, trading at 17 times. A discrepancy that even a cynic like myself finds…intriguing. Perhaps, a new catalyst will emerge. Perhaps, the new management team will consider strategic alternatives. Even the announcement of such a consideration might be enough to lift the shares. Though, let us not delude ourselves. The market is a cruel mistress, and redemption is rarely guaranteed.
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2026-02-17 03:32