Automatic Data Processing Inc. (ADP), which I first wrote about on May 8, 2009, at a price of $36.84, is doing battle with major, psychological resistance at $50, but the view from here argues the uptrend is stronger and should prevail. Here's why:

Look for ADP's FY2011 revenue to increase 4% to 7% on better-than-expected U.S. monthly job growth and business formation. A 4% to 6% revenue rise is likely in FY2012.

If you took advantage of Automatic Data Processing's (ADP) meandering this summer near $39, you made the correct move, as the shares have moved smartly higher, taking out resistance at $40.

Moreover, ADP, which I first wrote about on May 8, 2009, at a price of $36.84, is still favored at this juncture. Here's why:

ADP's FY2011 revenue will likely increase 2% to 3%, collared by lower-than-expected U.S. monthly job growth and business formation. Look for FY2012 revenue to rise 4% to 6%.

Automatic Data Processing (ADP), which I first wrote about on May 8, 2009, at a price of $36.84, continues to meander at/near $40, but I still like the shares at this juncture. Here's why:

Look for ADP's FY2011 revenue to increase 2% to 3%, collared by to-date lower-than-expected U.S. monthly job growth and business formation.

Longer-term, the payroll out-sourcing market has ample room for market share gains and the mining of new client theaters, especially small/medium-sized businesses, also is appealing. International business opportunities and a strong balance sheet further supports the favorable view. A better-than-decent annual dividend of $1.36 adds to the positive story.

"We believe that high-quality stocks purchased at historically low-price-to-high-yield offers the best potential for downside protection and upside appreciation," says dividend specialist Kelley Wright.

The editor of Investment Quality Trends explains, "Here we look at three blue chip stocks that have earned our top designation for outstanding dividend growth: IBM (IBM), Automated Data Processing (ADP) and Abbott Laboratories (ABT).

Here is a common sentiment about the stock market: "No fun at all. As I have said before, I believe it has turned into one big casino largely divorced from its original goal of providing capital to companies who produce something of value."

There's a lot of truth to what "granny" recently said to me in an e-mail. Fortunately she also noted "FYI Granny's up 5.86% + dividends." That would give her a gain of about 10% in the past ten months since I posted Where should granny put $50,000, suggesting a very conservative portfolio for an uncertain time.

Not only has she earned a very nice return, surpassing her CD account by 9.5% (20 fold), but she was able to do so with a great deal less volatility than the overall market most of us have lived through.

"Fear is back and it can be seen in the internals. So what is one to do? What we always do: identify quality, establish value, and take advantage of opportunity when it presents itself," suggests Kelley Wright.

The editor of Investment Quality Trends -- an advisory service that assesses blue chip stocks by analyzing their historic dividend yield levels -- adds, "While all ships go out with the tide, value is eventually rewarded. Remember, we are in this for the long haul.

"Our current Timely Ten -- featured below -- is our reasoned expectation based on our methodology and experience for what we believe will perform best over the next five years. Do we believe that all 10 will go up simultaneously or immediately? Of course not.

It does not come as a surprise that the government leaders and bankers of the European Union have put up what they hope will be a buttress against further erosion of the Euro, and the nightmare that is the Greek economy. Over the weekend with the Sword of Damocles hanging over their heads, they fabricated a $962 billion bailout package not unlike some of the wonders created last year by the United States.

I was surprised by the size of this economic band-aid and while the market has bounced back on the news, the best news might be for the maker of Band-Aids, Johnson and Johnson (JNJ). Last week Barron's was talking it up, and I did not give it much thought because there are better opportunities for growth and/or dividends. However, I think it is time to reconsider it because the economic band-aids are not solutions. They do not heal anything they only help to prevent infection. If the illness is the cancer of deficit spending, then they do even less. For real protection, it may be time to compromise on some growth and settle for blue chip stocks and JNJ is among the bluest of the blue.

Here are some highlights from this past week's earnings coverage on BloggingStocks:

• Aflac Inc. (AFL) higher Q1 earnings were better than analysts expected, due in part to a stronger yen.
• Automatic Data Processing Inc. (ADP) Q3 EPS were the same as a year ago and revenue inched higher.
• BlackRock Inc. (BLK) higher Q1 earnings fell short of analysts' expectations due to acquisition-related charges.
• Broadcom Corp. (BRCM) posted record revenue in Q1 and swung to a profit from a year-ago loss.
• Burger King Holdings Inc. (BKC) topped Wall Street's Q3 earnings estimate, but same-store sales fell.

There's little question that Automatic Data Processing (ADP) has a solid business. With roughly 570,000 clients of all sizes, the company generates a large amount of recurring revenues and free cash flows. Besides, it is difficult for customers to move to an alternative payroll solution.

Despite all this, the fact remains that persistent unemployment is a drag. In the latest quarter, revenues inched up 3% to $2.44 billion and earnings came to $403.6 million, or $0.80 per share. This compares to $402.5 million, or $0.80 per share in the same period a year ago.

"Our primary purpose at Investment Quality Trends is to assist investors in growing their capital and income base from which to derive cash for their current and future needs," says Kelley Wright.

The editor of IQ Trends explains, "To that end we believe that high-quality stocks purchased at historically low-price-to-high-yield offers the best potential for downside protection and upside appreciation.

Even though there are signs of improvement, the U.S. economy still remains sluggish. No doubt, this has been particularly tough for small business owners.

So to help things along, Congress has passed another stimulus bill: The Hiring Incentives to Restore Employment (HIRE) Act.

"Our primary purpose is to assist investors in growing their capital and income base from which to derive cash for their current and future needs," says Kelley Wright.

The editor of IQ Trends -- and author of the just-released book Dividends Still Don't Lie -- explains, "To that end we believe that high-quality stocks purchased at historically low-price-to-high-yield offers the best potential for downside protection and upside appreciation.

The stock of Automatic Data Processing (ADP), which I first wrote about on June 22, 2009, at a price of $36.84, has pulled-back recently after rising to about $44 in late 2009, and according to my analysis that creates another, attractive entry point.

Despite the worst U.S. recession in more than 25 years -- one that has devastated payrolls -- ADP has held its own, with its stock price in 2009 recovering most of what it lost during the pronounced contraction.

The contenders list is down to twelve stocks and three puts. I will not be trimming the list today. Instead, I will be reviewing possibilities among four more stocks of well established companies.

There are the two largest home improvement stores, Home Depot (HD) and Lowe's Cos (LOW) as well as the two largest payroll companies, Automatic Data Processing (ADP) and Paychex Inc. (PAYX). They are all fine, well-managed companies, so this will just be a numbers game along with a sense of whether the economy is going to reward investors in 2010, or if it's too early.

One of my wonderful friends, Ms. P, asked me for some guidance on how she might allocate $50,000 currently earning peanuts in a money market account. Though she is decades from becoming a grandmother, after a brief discussion about her financial parameters, it became clear to me that she was looking for a "granny fund."

In reality, my recommendations would be suitable, and perhaps desirable, for many passive investors as well.

The $50,000 is a portion of money Ms. P has set aside to purchase a home, which might happen in six months, but could also be pushed out further, depending on the economy and her situation. Basically, she wants to cover all her bases because she might need the money at any time and does not want to be caught short, while at the same time she would like to generate some revenue without taking any big risks.