Adobe: Why We're Bullish Now
CHONGQING, CHINA - MARCH 10: In this photo illustration, the Adobe logo is displayed on a smartphone ... More screen, with the company's latest stock market performance and candlestick charts visible in the background, highlighting Adobe's real-time financial trends, stock price fluctuations, market volatility, and investment developments within the software, digital media, and cloud computing sectors, on March 10, 2025, in Chongqing, China. (Photo illustration by)
Let's not mince words – Adobe (NASDAQ: ADBE) is a compelling buy at current levels. The company leads its sector, has exceptional fundamentals, is resting on a strong technical support level, and is trading at a valuation rarely seen for businesses of its caliber.
With shares down over 40% from their 2024 peak, Adobe may appear to be struggling. But this type of weakness often attracts savvy investors. Still, investing in any single stock comes with risk. You can reduce that risk and still participate in the upside with our High-Quality portfolio, which has significantly outperformed the S&P 500, delivering returns of over 91% since launch.
Adobe remains strong. Consider the following metrics:
All of this comes with a P/E ratio below 25. That's right, a sub-25 P/E for Adobe – one of the most reliable SaaS businesses out there. It's a rare blend of quality and value that long-term investors seek.
Here are the main reasons for the recent decline:
But none of these factors undermine Adobe's core strengths and long-term prospects.
Beyond the compelling valuation, Adobe currently sits at a key technical support level that previously fueled rallies in 2020 and 2023. In 2023 alone, it surged nearly 80% from this price range. This isn't just a number – it's a historically proven base where market sentiment turns bullish.
Adobe stands out as a timely opportunity. That said, timing individual stocks is difficult – it's hard to consistently buy at lows or sell at highs. A more consistent approach is to use a periodic, trigger-based rebalancing strategy like we implement in our High Quality Portfolio. With 30 curated stocks, it has regularly outperformed the S&P 500 over the last four years. Why? The HQ Portfolio delivers better returns with lower volatility than the index, as shown by the HQ Portfolio performance metrics.
Invest with Trefis
Market Beating Portfolios | Rules-Based Wealth
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
32 minutes ago
- Yahoo
1 Profitable Stock on Our Buy List and 2 to Question
While profitability is essential, it doesn't guarantee long-term success. Some companies that rest on their margins will lose ground as competition intensifies - as Jeff Bezos said, "Your margin is my opportunity". A business making money today isn't necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. That said, here is one profitable company that leverages its financial strength to beat the competition and two best left off your watchlist. Trailing 12-Month GAAP Operating Margin: 19.4% Founded by payroll software veteran Steve Sarowitz in 1997, Paylocity (NASDAQ:PCTY) is a provider of payroll and HR software for small and medium-sized enterprises. Why Are We Hesitant About PCTY? Estimated sales growth of 8.3% for the next 12 months implies demand will slow from its three-year trend Gross margin of 68.8% reflects its relatively high servicing costs At $176.78 per share, Paylocity trades at 6x forward price-to-sales. Dive into our free research report to see why there are better opportunities than PCTY. Trailing 12-Month GAAP Operating Margin: 10.2% Expanding its markets through acquisitions since its founding, Alamo (NSYE:ALG) designs, manufactures, and services vegetation management and infrastructure maintenance equipment for governmental, industrial, and agricultural use. Why Should You Sell ALG? Sales stagnated over the last two years and signal the need for new growth strategies Projected sales growth of 2.8% for the next 12 months suggests sluggish demand Flat earnings per share over the last two years lagged its peers Alamo's stock price of $214.51 implies a valuation ratio of 21x forward P/E. Check out our free in-depth research report to learn more about why ALG doesn't pass our bar. Trailing 12-Month GAAP Operating Margin: 11.2% Formed through the merger of 12 companies, Comfort Systems (NYSE:FIX) provides mechanical and electrical contracting services. Why Will FIX Beat the Market? Sales pipeline is in good shape as its backlog averaged 30.5% growth over the past two years Earnings per share grew by 67.6% annually over the last two years and trumped its peers Returns on capital are climbing as management makes more lucrative bets Comfort Systems is trading at $499.58 per share, or 26.7x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it's free. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today Sign in to access your portfolio
Yahoo
32 minutes ago
- Yahoo
This Is the One Investing Rule Warren Buffett Won't Break -- and It Fully Explains His $174 Billion Warning to Wall Street
Warren Buffett's vast outperformance of the benchmark S&P 500 over the last six decades has made him one of the most-followed money managers on Wall Street. Buffett's unwritten investment rules are generally followed to a "t," with a few notable exceptions throughout the years. The most sacred of all rules to Berkshire's chief pertains to getting a good deal -- and finding value on Wall Street is virtually impossible at the moment. 10 stocks we like better than Berkshire Hathaway › For the last 60 years, Berkshire Hathaway's (NYSE: BRK.A)(NYSE: BRK.B) billionaire CEO, Warren Buffett, has been virtually unstoppable. Even with an occasional underperforming year sprinkled in here and there, the Oracle of Omaha has overseen an aggregate return in his company's Class A shares (BRK.A) of 5,884,143%, as of the closing bell on June 18. For the sake of comparison, the benchmark S&P 500 has climbed by around 40,000%, including dividends, since the mid-1960s. Such an overwhelming outperformance of Wall Street's encompassing stock index has professional and everyday investors riding Buffett's coattails to long-term gains. This can be done by tracking Berkshire Hathaway's trading activity via quarterly filed Form 13Fs and mirroring it. Buffett's investment success isn't based on luck, and a nearly 5,884,143% cumulative return doesn't happen by accident. It's the result of Berkshire's CEO sticking to a set of unwritten rules that guide his investment philosophy. While some of these "rules" have proved fungible, on rare occasion, throughout the years, there's one investing rule the Oracle of Omaha refuses to bend -- and it fully explains why he's been a net seller of stocks since October 2022. One of the most tried-and-true investment philosophies Warren Buffett lives by is the idea of long-term investing. Instead of trying to guess when short-lived stock market corrections, bear markets, or economic recessions will take place, he purchases businesses or makes acquisitions that can take advantage of long-winded periods of growth. Some of Buffett's top-performing investments, in terms of unrealized gains, have been held for multiple decades, such as Coca-Cola, American Express, and Moody's. But even Berkshire's billionaire CEO has been tempted by a short-term trade before. During Berkshire Hathaway's 2022 annual meeting, Buffett told attendees that his company's stake in gaming colossus Activision Blizzard, which was subsequently acquired by Microsoft for $95 per share in cash, was for arbitrage purposes. When Buffett and his team of top advisors were building up a position in Activision Blizzard, shares of the company were vacillating in the high $70s and low $80s. Assuming the deal received the thumbs-up from regulators, this short-term arbitrage would disappear, which is precisely what wound up happening. However, Berkshire's brightest investment minds notably reduced their stake in Activision Blizzard before the deal got the OK from regulators. The Oracle of Omaha also tends to avoid companies that have a lot of long-term debt on their balance sheet. Taking stakes in financially flexible businesses is a smart investment strategy in all economic climates. Despite his general avoidance of debt-laden businesses, Buffett has been piling into integrated oil and gas company Occidental Petroleum (NYSE: OXY) for more than three years. He's acquired close to 265 million shares of Occidental's common stock, which is a bit of a head-scratcher given that it has quite a bit of debt on its balance sheet. Although a higher spot price for oil did help Occidental Petroleum lower its net debt, it offers far less financial flexibility than a company we'd typically see as a core holding in Berkshire Hathaway's $279 billion investment portfolio. Though Warren Buffett has demonstrated a willingness to deviate, on rare occasion, from his unwritten investing rules, there's one rule that's proved unbendable. The investing rule Berkshire's billionaire chief holds most sacred is that of getting a good deal. Paying an appropriate price for a stake in a wonderful business is paramount to success for the Oracle of Omaha. Regardless of how profitable a company is or how revered its management team may be, Buffett won't chase a stock higher if he doesn't perceive the shares to be trading a subjectively fair price. Buffett's willingness to dig in his heels and wait for stock valuations to come into his wheelhouse helps to explain why Wall Street's most-followed money manager has been a persistent seller of stocks for 30 months (and counting). Every quarter, Berkshire Hathaway's operating results contain a consolidated cash flow statement that allows investors to determine whether or not Buffett and his team were net buyers or sellers of stocks. For 10 consecutive quarters, Buffett has been a net seller, to the tune of $174.4 billion (on a cumulative basis). Despite having an all-time record $347.7 billion in cash, cash equivalents, and U.S. Treasuries at his disposal on Berkshire Hathaway's balance sheet, Buffett has virtually no incentive to put this capital to work due to historically stretched stock valuations. Nearly a quarter of a century ago, in 2001, Berkshire's CEO conducted an interview with Fortune magazine where he referred to the market cap-to-GDP ratio as, "probably the best single measure of where valuations stand at any given moment." This ratio, which adds up the value of all U.S. public companies and divides it by U.S. gross domestic product (GDP), has come to be known as the "Buffett Indicator." When back-tested to 1970, the Buffett Indicator has averaged a multiple of 0.85, or 85%. This is to say that the cumulative value of all public stocks has averaged approximately 85% of U.S. GDP over the last 55 years. Last week, the Buffett Indicator nearly hit 201%, and it's within a stone's throw of its all-time high of 205.55%, which was achieved in mid-February. Put simply, stocks have never been more expensive, based on this back-tested valuation tool. There's no easy remedy to the stock market being this pricey; and Warren Buffett has demonstrated a willingness to sit on his hands and wait patiently until valuations makes sense. If there's a silver lining to this $174 billion "warning" Buffett has provided to Wall Street and investors, it's that his patience and unwavering focus on long-term investing and value have previously paid off handsomely for Berkshire Hathaway's shareholders. Snagging price dislocations, such as Bank of America in 2011, demonstrates the value of waiting until valuations come into Buffett's wheelhouse. But given just how far outside of historical norms the Buffett Indicator is at the moment, it's become unlikely that a meaningful portion of Berkshire's treasure chest gets put to work before Warren Buffett steps down as CEO by the end of the year and hands the reins over to Greg Abel. Before you buy stock in Berkshire Hathaway, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Berkshire Hathaway wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $664,089!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $881,731!* Now, it's worth noting Stock Advisor's total average return is 994% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Sean Williams has positions in Bank of America. The Motley Fool has positions in and recommends Bank of America, Berkshire Hathaway, Microsoft, and Moody's. The Motley Fool recommends Occidental Petroleum and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. This Is the One Investing Rule Warren Buffett Won't Break -- and It Fully Explains His $174 Billion Warning to Wall Street was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
32 minutes ago
- Yahoo
1 Cash-Producing Stock with Impressive Fundamentals and 2 to Be Wary Of
Generating cash is essential for any business, but not all cash-rich companies are great investments. Some produce plenty of cash but fail to allocate it effectively, leading to missed opportunities. Luckily for you, we built StockStory to help you separate the good from the bad. Keeping that in mind, here is one cash-producing company that leverages its financial strength to beat its competitors and two best left off your watchlist. Trailing 12-Month Free Cash Flow Margin: 11.8% Originally the joint-venture of four cable television companies, AMC Networks (NASDAQ:AMCX) is a broadcaster producing a diverse range of television shows and movies. Why Should You Sell AMCX? Products and services have few die-hard fans as sales have declined by 4.6% annually over the last five years Sales were less profitable over the last five years as its earnings per share fell by 16.4% annually, worse than its revenue declines Waning returns on capital from an already weak starting point displays the inefficacy of management's past and current investment decisions AMC Networks is trading at $6 per share, or 2x forward P/E. Check out our free in-depth research report to learn more about why AMCX doesn't pass our bar. Trailing 12-Month Free Cash Flow Margin: 24.7% As a pioneer in 3D mammography technology that has revolutionized breast cancer detection, Hologic (NASDAQ:HOLX) develops and manufactures diagnostic products, medical imaging systems, and surgical devices focused primarily on women's health and wellness. Why Does HOLX Give Us Pause? Constant currency revenue growth has disappointed over the past two years and shows demand was soft Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 23.2 percentage points Shrinking returns on capital suggest that increasing competition is eating into the company's profitability At $65 per share, Hologic trades at 14.5x forward P/E. Dive into our free research report to see why there are better opportunities than HOLX. Trailing 12-Month Free Cash Flow Margin: 7.2% Spun out of Post Holdings in 2019, Bellring Brands (NYSE:BRBR) offers protein shakes, nutrition bars, and other products under the PowerBar, Premier Protein, and Dymatize brands. Why Will BRBR Beat the Market? Products are flying off the shelves as its unit sales averaged 20.8% growth over the past two years Earnings per share grew by 28% annually over the last three years and trumped its peers Stellar returns on capital showcase management's ability to surface highly profitable business ventures BellRing Brands's stock price of $58.78 implies a valuation ratio of 24.6x forward P/E. Is now the right time to buy? Find out in our full research report, it's free. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today Sign in to access your portfolio
