The pace of layoffs has slowed sharply in recent months, but businesses still cut 85,000 net jobs in December, the Labor Department said. The unemployment rate was unchanged at 10 percent, but economists suspect this is only because hundreds of thousands of frustrated workers stopped looking for jobs.

Still, with a improving economy the outlook for corporate hiring in the next few years should become much more robust. This is the perfect environment for the potential appreciation of the stock of Automatic Data Processing (ADP).

ADP performs payroll, tax, and other personnel-related services for over 500,000 clients, large and small. ADP declares it pays one of every six private sector employees in the United States. Its solutions enable employers to staff, manage, pay, and retain their employees in the United States, Canada, Europe, South America, Australia, and Asia.  As a payroll processor, ADP directly feels the effects of lower Total Non Farm Employment and the high unemployment rate in the United States.

An investment in ADP in a retirement plan gives an investor leverage to the improving United States economy in a company that leads its industry and has a steller balance sheet. Automatic Data Processing, Inc. (ADP) the payroll outsourcing company, yields 3%, has $1.62 billion in cash, with only $42.2 million in debt.

The company has done an outstanding job despite the difficult market conditions of the last two years. It even repurchased $13.7 million in shares in the first quarter. For its 2010 fiscal year ADP is projecting a 1%-2% decline in revenues and earnings that are essentially flat as compared to 2009 at $2.39 per share. It anticipates no improvement in pretax margins.

It may take several quarters for significant stock price appreciation but the generous dividend pays us to wait. The stock should be bought at the market open on Monday January 11, 2010. We are adding 200 shares to our Model Retirement Portfolio.  (As always, do your own due diligence.)

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