Adobe Systems (ADBE)

(A Top Pick April 19/17 Up 65%). He sees this as a company that has continued to capture market share and the dominate leading in digital media. He would continue to buy at this level as growth will continue for years.

(A Top Pick March 21/17. Up 59.71%.) This company really benefited from a shift in its business model to subscription. Once people are subscribing, it’s very easy for them to put the price up, which he thinks they’ve done 3 times in the last year. They're growing their revenue, their profitability and their market share. It is still a Buy.

This has been a wonderful performer on a stock basis. One thing that has always been a bit of a pause for him is its valuation. It has high expectations of future earnings, cash flow and revenue growth, and has satisfied those expectations, but at the very minute it doesn’t, there is a freefall waiting to happen before it moves back into a normalized valuation. Because of this, he has not participated.

(A Top Pick April 27/16. Up 39.46%.) Every quarter has been better than the previous quarter for 8 straight quarters. Earnings rose 370% when they reported last month. 26% growth in their Cloud business. It is very, very heavily used in corporate America.

The leader in creating digital media. There is enormous growth in the creation of Digital media. They used to sell their software as a package, with an upgrade every couple of years. There was an enormous number of people pirating their software. They then started selling by subscription. They caught a bunch of pirates that needed their software and had to wind up subscribing. This is a quickly growing pie. As their subscriptions go up, their margins go up. They now have 10 million subscribers. There are 7 million users that continue to use old versions, and will have to upgrade. (Analysts’ price target is $145.)

The two most important themes and most resilient in this market are technology and financials. Semiconductors look great. Software looks great. This company fits in a couple of key themes. They were the original big software company to go to the Cloud, selling their software by subscription. Today, 82% of revenue comes as a subscription. That is really attractive, because it is pretty predictable. Not only that, but revenues are growing very, very nicely. Revenues were up 22% in this most recent quarter. They should be able to grow revenue at 20% for quite some time, but because they make it and sell it a lot of times, as they grow their revenue, the margins go up. Their margins went to 36% from 31%, and the earnings went up 42%. Not an inexpensive stock, but the leader in software for Digital media, and we are all consuming quite a lot of Digital media. (Analysts’ price target is $143.50.)

(A Top Pick April 27/16. Up 24%.) It surprises him how well they do. They are winning business from Fortune 500 companies at a record pace. Their latest earnings report demonstrated that. The ability is for mobile to be sent out and reach customers in a much more visual way. Adobe is really helping companies get that done. Still a buy.

(A Top Pick Dec 16/15. Up 9.35%.) People know it for Acrobat the PDF maker, but they do a whole host of other products that are useful. They have Creative Cloud, and still need to migrate many of their existing clients to pay for the license for the subscription based model, which is extremely beneficial for them. They’re also focusing on reducing some of their costs. In general, this is a really strong, cloud-based solutions story.

Considers this as one of the horsemen of technology, an excellent company to buy. There is a dividend yield. They continue to readjust themselves in a Cloud-based format, rather than downloaded software. Has a recurring revenue structure. The company is excellent. Their editing programs and software have become the standard in the design world.

(Market Call Minute.) An interesting story. Not cheap, trading at 24X earnings. They have done a very good job of trying to understand how people use their products and marketing and sales.

An interesting discovery for him when he was looking for low volatility names. What attracted him was that they completely changed the way they distributed their business as a subscription model. This makes it much more affordable for smaller businesses and individuals, and also makes strides to eliminate the potential for pirated and illegal copies. Their most recent earnings were really surprisingly good, and the adoption rate was a very, very high.

This is just in the right spot. They are sort of old technology/new technology. Have put their creative suite up on line into the creative Cloud. That has tremendous growth for them. Last quarter had blockbuster numbers and blew away the street. There is a ton more growth coming. Management estimates there is at least 8+ million of their installed base that has yet to migrate to the Cloud, and that becomes a recurring revenue model as well. Huge uptick in revenues and huge uptick in earnings with very strong margins.

Like most technology stocks, this has a period of seasonal strength from October right through until usually the end of January. Looking at the technicals, the stock has continued to do very well. Chart shows it is still in an upward trend and recently hit an all-time high. Technically it looks very good. It is outperforming the market, trend is still on the upside and it is still above its 20 day moving average. His bias would be to use seasonality for this particular stock, i.e., buy it around the middle of October.

Chart tells him that it is going higher. It shows a breakout. A wave count shows the 1^st correction starting in mid-2011, levelling off through 2012 with a strong advance starting in late 2012. It is $10 above the 200 day moving average. If you ease yourself into it has more room to go.