From Cabot Wealth Advisory 5/19/16 Sign up for Cabot Wealth Advisory—it’s free!
A potential top growth stock that few are talking about is one I’ve written about before. Adobe Systems (ADBE) and its various software suites have become de-facto platforms for the digital age—its Creative Cloud suite includes the leading products in its field (Illustrator, InDesign, Photoshop, etc.) that most leading marketers use, as well as educators and hobbyists.
Adobe’s Marketing Cloud suite is gaining in popularity for online marketing campaigns and measurements, and the same goes for its Document Cloud suite, which allows for e-signatures and archiving of legal and business documents. Creative Cloud is driving results, which have been fantastic—sales growth is accelerating, earnings were up 50% in the latest quarter, and analysts see 30%-plus bottom line growth for another couple of years.
The stock had a big wipeout earlier this year, but then gapped back toward its highs in March and has tightened up beautifully since then. Of course, if the market really falls apart, all bets are off. But any decisive push above 98 (ideally on huge volume) looks buyable to me, with a stop in the 90 area.
Long-term, I think the upside for Adobe could be huge as money comes out of the old tech names and into stocks like ADBE. ADBE is a Cabot Top Ten Trader stock. Click here for more information.
By Timothy Lutts, Chief Analyst, Cabot Stock of the Month
From Cabot Wealth Advisory 1/25/16 Sign up for Cabot Wealth Advisory—It’s free
I remember the early days of desktop publishing when pioneers Adobe and Aldus were vying for leadership in the industry. Aldus had PageMaker, which for a time seemed invincible, but Adobe, which owned the PostScript language that PageMaker was based on, eventually acquired Aldus, and since then Adobe has been king of the hill.
And it’s a much bigger hill today, because in addition to building on its leadership in graphic design tools, Adobe has been making waves in the fast-growing digital media and digital marketing industries, with products such Creative Cloud, Document Cloud and Marketing Cloud.
As a result, growth at the company is accelerating! Earnings are expected to grow 33% in 2016 and 34% in 2017!
Much of this, of course, is known to investors. In 2015, their buying pushed the stock up 30%.
But I think there’s a lot more growth ahead for both the company and the stock, and you can see that other investors are expecting it too by the way they’ve resisted selling in recent weeks. In 2016, the stock is down only 8%. That’s excellent for a growth stock!
So, if you’re in the mood for buying, you could simply step up and buy some ADBE on this correction (taking it slow, as I advised).
What I recommend, however, is that you become a regular reader of Cabot’s newest advisory, Smart Investing in Turbulent Times, and get analyst Crista Huff’s updates on the stock every week.
Crista is a fundamental analyst at heart, and she steers her readers to both growth and value stocks. (She spent 13 years at Morgan Stanley, where she was a Vice President, so she knows quality stocks.) But Crista adds a twist; she won’t buy until a stock’s chart is turning for the better!
Using this methodology, Crista added ADBE to her portfolio back in October at 85 as the stock was coming out of the August-September selloff, and her readers are still sitting on profits. To see what she’s recommending now, click here.
Adobe Systems (ADBE): A stock for your watch listBy Michael Cintolo, Chief Analyst of Cabot Growth Investor and Cabot Top Ten Trader
From Cabot Wealth Advisory 10/22/15 Sign up for Cabot Wealth Advisory—it’s free!
I’m doing a little new buying in stocks that have either nosed out to new highs and building my watch list in stocks that could lift off on earnings. One to watch is Adobe Systems (ADBE), the well-known leader in digital marketing and publishing tools, whose switch to a cloud- and subscription-based revenue model has gone well. Here’s what I wrote about the stock three weeks ago in Cabot Top Ten Trader:
“Adobe Systems used to be a software company that sold you a blister pack with a CD of your Acrobat, Flash or Photoshop software. These enormously popular programs were mainstays of creative designers for the Web, print or media. But the company has been working hard to convert its users to a software-as- a-strategy to sell its popular products in a package (called “Creative Cloud”) that will smooth out its revenue stream with continuing subscription fees. The company’s quarterly report on September 17 featured a snappy 93% jump in earnings on a 21% gain in revenue. Both the improved EPS and revenue growth rates were the strongest in years, and investors appeared to take the company’s (slightly) disappointing guidance for Q4 in stride. Adobe’s announced intention to become a digital cloud juggernaut looks quite possible, as the company added 684,000 net new subscribers during the latest quarter, bringing its total to over 5.3 million. The company has beefed up its offerings in the past year with a takeover of online stock-photo leader Fotolia in December 2014 and a 3D animation company, Mixamo, in May. Investors like the aggressive moves to augment the product line and the new revenue model. Adobe Systems looks to have plenty of fuel.”
What’s interesting is that, a few days after I wrote this, the company pre-announced lower-than-expected earnings for 2016, causing the stock to fall from 85 to as low as 79 the next day. But that proved to be just a shakeout, as the stock powered right back to new highs near 89 before pulling back a bit this week.
With sales and earnings growth remaining strong for many quarters to come, ADBE should perform well … if the market’s rally continues. I’m not opposed to starting with a small position around here, but your best move is to consider a subscription to Cabot Top Ten Trader, where you’ll find my advice on ADBE and all the other new market leaders that lift off in the days and weeks ahead. Click here to order.
|Adobe Systems (ADBE)
345 Park Avenue
San Jose, California 95110
|Index Membership: N/A
Industry: Application Software
Full Time Employees: 12,499
1/25/16 Adobe Systems (ADBE): Making waves in digital median and marketing
10/22/15 Adobe Systems (ADBE): A stock for your watch list