Why Adobe is My Top Stock to Buy for 2019 | Summary and Q&A

TL;DR

Adobe Systems is a top-tier software company with a dependable business model and a diverse product offering, including Creative Cloud and digital experience tools.

Key Insights

• 💪 Adobe Systems is a $110 billion company with a strong presence in the software industry.
• ☠️ The switch to a software-as-a-service model has made Adobe's financial statements more stable and its revenue and earnings have been growing at impressive rates.
• 🏅 The company's Creative Cloud products are widely used and considered the gold standard in the creative community.
• 👻 Adobe's expansion into the digital experience space has allowed it to serve enterprise customers and diversify its revenue streams.
• 💦 Despite experiencing a significant drop during the last recession, Adobe is expected to fare better in future downturns due to its recurring revenue model.
• ❓ Adobe's valuation is comparable to that of Microsoft, indicating the market's recognition of its growth potential.
• 👨‍💼 The company's consistent growth and dependable business model make it an attractive investment option for those with a longer time horizon.

Transcript

Dylan Lewis: Alright, Brian, climbing up the risk ladder, we've got our last stock. I think this is probably for folks that have a little bit of a longer time horizon. It's a steady business, but there's a lot of growth priced into it. That's Adobe Systems, maybe a name that a lot of people interact with, but haven't quite thought about investing i... Read More

Questions & Answers

Q: What are some of the popular products offered by Adobe Systems?

Adobe Systems offers products like Photoshop, Illustrator, Premiere Pro, Acrobat, which are widely used by designers, videographers, and animators in the creative community.

Q: How has Adobe Systems diversified its business beyond Creative Cloud?

Adobe has expanded into the digital experience space, providing cloud-based marketing and analytics tools to enterprise customers, helping them with marketing campaigns, e-commerce presence, and data analysis.

Q: How did Adobe Systems perform during the 2007-2008 recession?

Adobe's stock fell by about 65% during the last recession, but its recent switch to a software-as-a-service model has made its financial statements more stable and resilient. Even during the recession, Adobe remained profitable.

Q: How does Adobe's valuation compare to other technology companies?

Adobe's valuation is similar to Microsoft's, with a trailing price-to-earnings ratio of around 45X and a forward ratio of 25X. Despite being less established, Adobe's dominance in the creative space and strong growth prospects make it attractive to investors.

Summary & Key Takeaways

• Adobe Systems is a $110 billion company known for its Creative Cloud software products like Photoshop and Illustrator.

• In addition to Creative Cloud, Adobe has a digital experience unit that offers marketing and analytics tools for enterprise customers.

• Despite a past downturn, Adobe's switch to a software-as-a-service model has made its financial statements more resilient, and the company has shown consistent growth.