Adobe Systems (ADBE) Highlighted As Momo Momentum Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Adobe Systems ( ADBE) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Adobe Systems as such a stock due to the following factors:

  • ADBE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $197.1 million.
  • ADBE has a PE ratio of 63.9.
  • ADBE is currently in the upper 30% of its 1-year range.
  • ADBE is in the upper 25% of its 20-day range.
  • ADBE is in the upper 35% of its 5-day range.
  • ADBE is currently trading above yesterday's high.
  • ADBE has experienced a gap between today's open and yesterday's close of 0.4%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on ADBE:

Adobe Systems Incorporated operates as a diversified software company worldwide. The company operates in three segments: Digital Media, Digital Marketing, and Print and Publishing. ADBE has a PE ratio of 63.9. Currently there are 9 analysts that rate Adobe Systems a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Adobe Systems has been 4.0 million shares per day over the past 30 days. Adobe Systems has a market cap of $28.1 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.41 and a short float of 1.5% with 2.02 days to cover. Shares are up 49.2% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Adobe Systems as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • Compared to where it was trading one year ago, ADBE is up 71.22% to its most recent closing price of 56.23. Looking ahead, although the push and pull of a bull or bear market could certainly alter the outcome, our view is that this stock's positive fundamentals give it good potential for further appreciation.
  • ADBE's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.77, which clearly demonstrates the ability to cover short-term cash needs.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company.
  • The gross profit margin for ADOBE SYSTEMS INC is currently very high, coming in at 92.17%. Regardless of ADBE's high profit margin, it has managed to decrease from the same period last year.
  • Net operating cash flow has decreased to $215.53 million or 18.15% when compared to the same quarter last year.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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