As the economy continues to struggle, it may seem strange that investors are flocking to a company that dominates the business of processing payroll checks. But with a 40-year string of double-digit-percentage earnings gains, Automatic Data Processing is a rock-solid refuge. Its shares have risen 33 percent since the market bottomed on Sept. 21.

At a recent price of $58, or 31 times the 2002 consensus earnings estimate, the stock is no bargain, analysts agree. On the other hand, ADP has outpaced Standard & Poor's 500-stock index toward the end of each of the past five recessions. Why risk being late to the party, especially when you can be sure that ADP management, led by CEO Arthur Weinbach, will do whatever it takes to maintain its impressive earnings streak?

Still, most analysts expect at least two to three more quarters of lackluster results. Rising unemployment has a direct impact on ADP, which processes paychecks for more than 30 million workers.

A less obvious problem is the Federal Reserve's efforts to ignite the economy by slashing short-term interest rates. In the fiscal year that ended in June 2001, ADP received $519 million in interest from the float on $8 billion in clients' tax-withholding funds, accounting for more than one-third of ADP's pretax income of $1.5 billion.

ADP's employer-services division accounts for 57 percent of its revenues.

Other divisions provide transaction-processing and record-keeping for the brokerage, auto and insurance industries. Ideally those businesses should offset the cyclical nature of employee services. The brokerage operation, however, has suffered from the decline in stock trading.

As a result the company, which showed 12 percent revenue growth in its previous fiscal year, says that it expects a mid-single-digit increase in sales this year.

Even so, ADP has the muscle to leverage those weak results into a double-digit earnings gain, thanks to a $150 million cost-cutting effort and an aggressive stock-repurchase program.

Once the economy recovers, ADP's strengths should re-emerge. It has $2.6 billion in cash and, with $7 billion in annual revenues, it towers over such rivals as Ceridian and Paychex. Still, analysts are hardly unanimous in endorsing the stock. Craig Peckham of Jefferies & Co. rates ADP a "hold," which is often viewed as equivalent to a sell recommendation. He suggests delaying purchase until the unemployment rate has leveled off or decreased for two straight months.