Why ADP and Intuit Are the Steadiest Bets in 2025's Volatile Market

In a year marked by geopolitical tensions, fluctuating interest rates, and supply chain disruptions, investors are scrambling to find companies that can deliver consistent growth amid chaos. Look no further than ADP (Automatic Data Processing) and Intuit, whose software-driven models and secular tailwinds are proving far more resilient than capital-intensive industries like construction materials. While construction stocks face regulatory headwinds and cash flow volatility, these two tech leaders are leveraging defensible moats to power predictable returns. Here's why they should be at the top of every investor's list.

The Construction Materials Trap: Volatility and Regulation

The construction materials sector, once a poster child for infrastructure spending, now faces a perfect storm of risks.

1. Regulatory Overhang:
   Tariffs on steel and aluminum, environmental compliance costs (e.g., carbon taxes), and geopolitical trade disputes are squeezing margins. For instance, U.S. firms importing materials from China face tariffs that can add 5–10% to project costs, while labor shortages in skilled trades delay projects and inflate expenses.

2. Price Volatility:
   Commodity prices for steel, copper, and cement are prone to sudden swings. A single mine closure in Chile or a Chinese economic slowdown could disrupt supply chains, creating unpredictable cash flow.

3. Cyclical Demand:
   Residential construction is tied to interest rates, which are still near historic highs. Meanwhile, infrastructure projects often depend on government funding—far less predictable than the recurring revenue streams of SaaS businesses.

ADP and Intuit: Built for Stability

Both companies thrive in human capital management (HCM) and financial software, sectors with recurring revenue models, high switching costs, and secular growth drivers.

ADP: The Engine of Predictable Cash Flow

• Q2 2025 Results: Revenue rose 8% to $5.05 billion, with margins expanding due to scale and automation. Adjusted EPS grew 10%, and free cash flow (despite share buybacks) remains robust.
• Defensible Moat: ADP's Lyric HCM platform integrates payroll, compliance, and workforce analytics, creating sticky customer relationships. Over 1 million clients rely on its ecosystem, making it hard for competitors to displace.
• Growth Drivers: Partnerships with Fiserv and the Workforce Software acquisition are expanding its addressable market.

Intuit: Dominating the Small Business Cloud

• Q2 Surge: Revenue jumped 17% to $4.0 billion, fueled by QuickBooks Online (22% growth) and Credit Karma's lending platform. Non-GAAP margins hit 32%, underscoring profitability.
• Moat Strength: Intuit's AI-driven tools (e.g., automated tax filing, credit score optimization) create dependency. Its $2.5 billion in cash and $3.6 billion remaining in buybacks signal confidence.
• Future Proofing: The shift to remote work and gig economy platforms is boosting demand for its payroll and financial management solutions.

Why Now Is the Time to Invest

1. Defensive Sectors in an Uncertain Economy:
   Both companies serve non-discretionary needs—payroll processing and tax compliance—that remain steady even during recessions.

2. High Return on Capital:
   ADP's return on equity (ROE) of 28% and Intuit's 24% ROE reflect efficient capital allocation, unlike construction firms tied to heavy machinery investments.

3. Dividend Discipline:
   ADP's 52-year dividend growth streak and Intuit's 16% dividend hike signal financial health. Compare this to construction stocks, where dividends are often cut during downturns.

The Bottom Line: Steady Earnings, Steadier Stocks

In 2025's volatile market, ADP and Intuit offer two things investors crave:
- Predictability: Their recurring revenue models and high retention rates (e.g., ADP's 92% client retention) reduce earnings surprises.
- Defensible Moats: Switching costs and ecosystem advantages (e.g., QuickBooks' integration with banks) keep competitors at bay.

Act now: These stocks are not just bets on software—they're bets on the future of work and finance. With valuations still reasonable (ADP's P/E of 31 vs. its 5-year average of 35) and Intuit's forward P/E of 28, the risk-reward is compelling. Construction materials may dazzle in boom times, but in 2025's reality, steady beats volatile every time.

Invest with conviction.