E Between The Sheets With Adobe Systems, Inc.

By the end of the day tomorrow you should have seen numerous headlines about Adobe System, the vast majority of which will be touting the value of owning this stock. Don't believe what you read. The stock is hugely overpriced. But hey, that's just what I think, and admittedly, nobody is paying me not to say what I think.

What They Do
Adobe Systems is a software company offering products and services used professionals, marketers, knowledge workers, application developers, enterprises and consumers for creating, managing, delivering, measuring, optimizing and engaging with compelling content and experiences across personal computers, devices and media. Industry peers include Apple, Inc., Microsoft Corporation, and Quark Software, Inc.

Short-Term Target
My short-term target for the stock is $258.52, with an initial trailing stop set at $241.28. With a current price of $244.95, upward price movement will find resistance at $251.61 and again at $262.25, with final resistance found at $272.56. Downward price movement will find support at $238.98 and at $220.10.

Momentum Target
My momentum target for the stock is $83. Momentum targets are determined by overlaying a company’s most recent annual EPS, its year-over-year earnings growth, and the current yield of a 10-year treasury. As a value investor, the central issue that I have using momentum targets is that they require investors to trade in stocks that have already enjoyed significant gains while making no allowances for overall market corrections or the sustainability of a company’s earnings.

Growth Target
My growth target for the stock is $251. Growth targets are determined using a company’s year-over-year earnings growth, year-over-year PE growth, and year-over-year price growth.

Fair Value Investing
Fair value investing requires investors to consider a company’s overall financial condition including past and future earnings growth, free cash flow, both book and tangible book values, net current asset value, and many other valuation metrics. For many fair value investors the minimum required hold is five (5) years. What follows are some of the metrics I use to determine my fair value estimates. They are presented only to assist investors considering an investment in Adobe Systems.

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Disclosure:I am not a licensed or registered investment professional, nor am I qualified to provide investment advice. I also hold no shares of the stock mentioned in this ...

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