The Casual Investor
Investing tips for those who are not yet rich
Stock Pick 11/24/2007: ADBE

For today's stock pick, I looked through 346 stocks in the software sector.  After long and careful screening, it came down to four strong companies (ADBE, ADSK, CHKP, and QSII).


It was a tough choice, but in the end my vote's for Adobe (ADBE).  Each of these companies has attributes that outshine those of the other three, but Adobe has the best overall package.  First, they're a well-known business, even outside the field.  Their product line is strong also.


Out of the four stocks that made the penultimate cut, Adobe has the second-best profitability and the third-best management effectiveness.  If you look at the analyst estimates, they have the strongest current buy recommendation.  Adobe is the largest of these four companies, and they recently named a new CEO.  When the new CEO was named, the price per share fell, but it has risen since then.  Given the good earnings reports and the favorable internal opinion of the new CEO, Adobe seems poised to gain value.


Even though all four of these companies have considerable merit, I'm going to go out on a limb and pick ADBE for today's post.  Their profit margin is 23.40% compared to a gross margin of 97.10% and their average investment return is 17.65%.  Their P/E ratio is 37.10 and the current price per share is slightly closer to the 52-week low than to the high.  Adobe's 52-week range is relatively small, and it is a large company, so it is not likely to decrease by a significant percentage; on the other hand, it seems very likely that the share price will increase and at least approach the 52-week high, if not surpass it, in the coming months.


2007-11-25 04:26:49 GMT


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