Adobe Systems, Inc. (ADBE)

TheGarcipian (99.55) Submitted: 6/01/07 6:47 AM : Start Price: $44.15 ADBE Score: 11.40

With a powerhouse of software applications in its arsenal (Photoshop, Illustrator, Dreamweaver, InDesign), Adobe already has some of the appreciation for its stock factored into the price. Certainly, with a PEG ratio of 1.86 (as of 6/1/07) and forward & trailing P/Es of 26 49 respectively, this stock is not going to be as big a winner as others I have currently selected (to wit: HERO, MDR, PCU, MIDD, etc.). But being the inventor of PostScript and the defacto document format standard of PDF, Adobe has a lot going for it. Licensing revenues will continue to pile up for that format, as will revenue for their leading edge software products. I like that the company has zero debt and a mammoth treasury of over $2B, almost equal to last year's revenues! I'd like to see the profit margin be a lot higher than the 21% it is currently, being that this is more than partially a software house. But with all that's going for it, Adobe will outperform the S&P500 for the next 2+ years.

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