Adobe Systems Incorporated (ADBE): Are You Invested?

Page 1 of 2

Adobe Systems Incorporated (NASDAQ:ADBE) failed to make our list of top ten tech stocks loved by hedge funds last quarter, but we believe it is one of the best investments available in the software and programming industry. Adobe saw its most recent fiscal quarter (4Q) come in with higher revenue, as a result of better adoption rates for cloud computing services. The company has a diverse suite of products that should help drive interim growth, and a bullish IT environment in the U.S. and Europe certainly won’t hurt.

SAC CAPITAL ADVISORS

Adobe is leading the way in the field of paperwork digitization and record-keeping, and almost all of its revenues come from licensing fees. Given a large portion of its revenues are from this arena, Adobe enjoys a much higher EBITDA margin than its peers at 34%. Adobe also has billionaire Steven Cohen of SAC Capital as one of its big-name investors; Cohen upped his stake by 400% last quarter (see Steven Cohen’s top picks).

Weakness in one of Adobe’s largest markets, Europe, forced it to fall below $20 in 2009, but the stock has since rebounded and is up 30% year to date. Adobe has impressive product lines that sport an average life cycle of about 24 months, allowing for higher lifetime revenue per customer. Adobe trades relatively cheap when compared to major peers at only 15 times forward earnings, which is also well below its five-year average P/E of 20x.

From a top line standpoint, Adobe trades at 4.2 times sales, where the average of its major peers is around 5.1x. If shares of the company did trade more in line with its peers, there’s an upside price of around $43 – 13% higher than its current trading price.

Looking at one of Adobe’s key competitors, Autodesk, Inc. (NASDAQ:ADSK) is a design and drafting software company that appears to present another solid ‘growth at a reasonable price’ opportunity. Autodesk offers investors one of the best expected EPS growth rates at 17%, and sports a bargain-bin sales multiple of at 3.4x. After a near 25% slide from its high of $42.69 earlier this year, Autodesk now trades at a measly PEG of 1.0. In the third quarter, billionaire Dan Loeb took a new, rather large stake in Autodesk (see Dan Loeb’s newest picks here).

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!