5 Best Aggressive Stocks to Buy Now

4. Adobe, Inc. (NASDAQ:ADBE)

No of HFs: 106

Total Value of HF Holdings: $10.5 Billion

In an article, Nelson Roberts Investment Advisors mentioned ADBE in their 3Q 2020 investor letter,

“We purchased Adobe (NASDAQ: ADBE), the leading provider of content creation software. Adobe is a software company with a recurring revenue stream, which should insulate it from some of the negative effects of the COVID-19 outbreak.”

In a separate article, we shared RiverPark Advisors’ comment about the stock in their Q2 2019 investor letter:

“Adobe, which we have owned now for several years,3 is a prime example of this phenomenon of underestimating future earnings leading to a material differential in valuation. From 2015 to 2018, Adobe regularly beat quarterly earnings by an average 11% each quarter.4 In November 2015, Wall Street was quite bullish on the stock and forecast 44% annual EPS growth for the next three years – this led to a consensus estimate for Adobe’s 2018 EPS of “only” $3.57.5 Investors were seemingly paying 48x the next year’s EPS estimate6 (the S&P 500 multiple was 18x) and 25x 2018’s EPS making the stock look quite expensive. However, given the secular tailwind of marketing and cloud services driving the company’s growth, Adobe actually grew earnings 63% per year over that time (nearly 50% faster per year than the Street had projected), resulting in EPS in 2018 of $5.20. As a result, in November 2015, ADBE shares traded at only 17x the company’s actual 2018 EPS (more than 30% lower than what the Street had estimated).”