Why Adobe Stock Is Down By 8% Today

Key Insights

  • Adobe beats analyst estimates on both earnings and revenue. 
  • The company’s weak Q2 guidance is the main reason for today’s sell-off. 
  • The stock needs positive catalysts or additional support from the general market rebound to break the current downside trend. 

Adobe Stock Falls On Weak Guidance

Shares of Adobe  gained downside momentum after the company released its quarterly report. The company reported revenue of $4.26 billion and adjusted earnings of $3.37 per share, beating analyst estimates on both earnings and revenue.

While Adobe managed to beat analyst estimates, the report did not provide support to the stock, which made an attempt to settle below the $427 level.

The market ignored the company’s quarterly results and focused on Adobe’s guidance for the second quarter. The company expects to report revenue of $4.36 billion and adjusted earnings of $3.30 per share, below analyst estimates.

What’s Next For Adobe Stock?

Analysts expect that Adobe will report earnings of $13.78 per share in 2022 and earnings of $16.26 per share in 2023, so the stock is trading at 26 forward P/E for 2023.

This is not expensive for Adobe stock, which touched highs near the $700 level back in November 2021, and has already lost almost 40% of its value since then. However, concerns about slowing growth may push the stock even lower.

The market is worried about aggressive rate hikes from the Fed, so traders are very sensitive to guidance from tech companies. The second-quarter revenue and earnings forecast from Adobe shows that no growth is expected, which is bearish for the stock.

It should be noted that the near-term dynamics of Adobe stock will also depend on general market mood. The recent rebound of S&P 500 provided significant support to Adobe shares. In case this rebound continues, Adobe stock may get some support despite its disappointing second-quarter guidance.

For a look at all of today’s economic events, check out our economic calendar.

Best ETFs to Buy for March 2022

When there’s huge buying and selling in the market, it’s usually unsustainable and coincides with peaks and troughs, especially over the past two years. It reminds me of investor overexuberance. There’s just too much excitement (either of the buying or selling variety), for such movements to be anything that will last.

Chart, histogram Description automatically generated
Source: www.mapsignals.com

Opportunistic investors can take advantage of these movements, especially when there’s deep selling. Those times have proven to be when stocks and ETFs are on sale. When zooming in to the last three months (below), we see lots of unsustainable selling. This could set up well for some discount buying that may serve long-term investors well.

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Source: www.mapsignals.com

Given these conditions, we’ve identified some ETFs we think have long-term potential, a few of which are priced nicely right now: RDVY, QUAL, IGV, IHI, and FDN.

Long-term investors should look for ETFs (and their stocks), with great setups. Remember, ETFs are just baskets of stocks, so we need to look at them in detail. MAPsignals specializes in scoring more than 6,500 stocks daily. If I know which stocks compose the ETFs, I can apply stock scores to the ETFs. Then I can rank them all from strongest to weakest.

Let’s get to the five best ETF opportunities for March 2022.

#1 First Trust Rising Dividend Achievers ETF (RDVY)

This is a market rotation play as growth stocks are shed in favor of more predictable value-oriented companies that pay dividends. And while dividends are great and rising dividends are even better. RDVY holds some great companies that have histories of raising dividends. It’s likely why Big Money has been buying RDVY in chunks over the past year:

RDVY holds several solid stocks, including some big technology companies; one example is Activision Blizzard Inc. (ATVI), which has a 3-year EPS growth rate of 16.6%, but is still getting sold a lot. Here are Big Money signals for ATVI:

#2 iShares MSCI USA Quality Factor ETF (QUAL)

This one is all about quality. QUAL holds a basket of stocks with excellent fundamentals, many of which are household names. So, it’s not surprising that an ETF all about quality has performed well over the past few years. There were dips around October and February (red bars), but big dips have typically preceded big rises in this ETF:

One great stock QUAL holds is Nike, Inc. Class B (NKE). It’s a long-time Big Money favorite with fantastic fundamentals (3-year EPS growth of 67.2%). As the multi-year chart below shows, it’s been a growing giant for a while:

#3 iShares Expanded Tech-Software Sector ETF (IGV)

This high-flying ETF has seen Big Money buys for a long time, and it’s performed well. It holds some phenomenal stocks, many of which are outliers – the kind that of stocks that produce HUGE gains. But with the recent pullbacks, IGV can be considered a discount buy right now:

One of many big winners within IGV is Adobe Inc. (ADBE). It’s an outlier stock – it’s 3-year sales growth is an impressive 20.8% – and has been a Top 20 Big Money buy for years:

#4 iShares U.S. Medical Devices ETF (IHI)

This one is another on our hunt for bargains. By identifying weaker ETFs holding stocks with strong fundamentals, we can buy in a good spot. IHI was destroyed in January 2022, but not long before that was at peaks, likely because its stocks are phenomenal and medical devices markets remain strong:

One standout within this ETF is Thermo Fisher Scientific Inc. (TMO), a giant healthcare company high huge earnings growth (3-year EPS growth of 40.8%). The multi-year chart below shows lots of Big Money buying. And notice how sells appear to be discounts:

#5 First Trust Dow Jones Internet Index Fund (FDN)

This is another “bargain bin” pick, but that’s because this ETF is getting killed recently (unfairly in my opinion). FDN has seen Big Money buying in the past, but it’s dropped significant value since around last Still, it holds fantastic technology stocks, which makes the current price appetizing:

One great stock in FDN is Amazon.com Inc. (AMZN). It’s been stagnant lately, but Big Money has leaned on AMZN for a long time. Given the firm’s ubiquitous nature, growth vision, and huge performance (26.6% 3-year sales growth and 50% 3-year EPS growth). It wouldn’t surprise to see this one rise high again:

Here’s a Big Money recap:

  • When Big Money buying pours in, stocks tend to go up
  • Red selling on great quality can be a great opportunity
  • Repeated buying usually means outsized gains

Let’s summarize here:

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RDVY and QUAL rank high. IGV, IHI, and FDN, however, rank lower on our list, due to weaker technicals. That’s why I think these weaker ETFs represent great potential bargains.

The Bottom Line

RDVY, QUAL, IGV, IHI, and FDN are my top ETFs for March 2022. These picks can rise higher, in my opinion, largely because they each hold great stocks. Some of them are discounted right now because of selling pressures. But as we know, deep red days often prove to be big opportunities over time.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds no positions in RDVY, QUAL, IGV, IHI, FDN, ATVI, ADBE, TMO, or AMZN in managed or personal accounts at the time of publication; he holds long positions in NKE in managed accounts.

Investment Research Disclaimer

https://mapsignals.com/contact/

 

Best Growth Stocks to Buy Now for February 2022

The best growth stocks in this environment have low debt levels and great business models, which means they can survive rocky times. In other words, they’re the highest quality, “best in breed” names. You see this combination a lot in large-cap stocks, which have been supporting markets for a long time, but smaller stocks can check the boxes too.

See, I believe the process is more important than the stocks. The best outlier stocks (regardless of market cap) have 3 traits: strong fundamentals, great technicals, and a history of Big Money activity in the shares.

Outlier stocks see a lot of Big Money buying. Oftentimes, that can be institutional activity. At MAPsignals, we believe Big Money trading can alert you to the forward fundamental picture of a stock. And we want the odds on our side when looking for the highest quality stocks.

Focusing on quality is paramount when markets are under pressure. Using the MAPsignals database, we’ve filtered for various quality metrics to identify five ideas for potential long-term investment. Three of the names are large caps that can handle storms, while the other two are smaller, riskier stocks with big upsides: GOOGL, ADBE, MSFT, GNRC, & INMD.

Up first is Alphabet, Inc. (GOOGL), Google’s parent company.

Even though great stocks can be volatile, like GOOGL this year, these companies are worthy of attention, especially after blowout earnings and stock split announcements. Check out GOOGL:

  • 3-month performance (-9.7%)
  • Historical Big Money signals

Just to show you what our Big Money signal looks like, have a look at the top buy signals GOOGL has made the past few years in the chart below. Blue bars are showing it was likely being bought by a Big Money player according to MAPsignals.

When you see a lot of them, I call it the stairway to heaven:

Source: www.MAPsignals.com

But, what about fundamentals? As you can see, GOOGL’s sales and earnings have been strong, and its debt-to-equity ratio is low:

  • 1-year sales growth rate (+41.2%)
  • 3-year earnings growth rate (+39.9%)
  • Debt/equity (+11.3%)

Next up is Adobe Inc. (ADBE), the design software giant.

Check out these technicals for ADBE:

  • 1-month performance (-9.0%)
  • Historical Big Money signals

Let’s look long-term. These are the top buy signals Adobe has made since 2016. The Big Money love is obvious:

Source: www.MAPsignals.com

Now let’s dive deeper. As you can see, Adobe has had rock-solid growth and low debt:

  • 3-year sales growth rate (+20.8%)
  • 3-year earnings growth rate (+29.2%)
  • Debt/equity (+31.6%)

The third growth stock idea is Microsoft Corporation (MSFT), the technology giant.

Strong candidates for growth usually have Big Money buying the shares. Microsoft has that. Also, the stock has fallen recently:

  • 3-month performance (-12.4%)
  • Historical Big Money signals

Below are the Big Money signals Microsoft has made since 2010. That’s the JUICE!

Source: www.MAPsignals.com

Now let’s look under the hood. Microsoft’s sales and earnings growth is impressive. And given its strong cloud business, software foothold, and gaming prospects, I expect more growth in the coming years:

  • 3-year sales growth rate (+15.1%)
  • 3-year earnings growth rate (+63.7%)
  • Debt/equity (+57.9%)

Number four on the list is a high-quality smaller company with a lot of promise, Generac Holdings Inc. (GNRC), which makes residential generators and other power generation equipment.

Here are the technicals important to me:

  • 1-month performance (-10.1%)
  • Historical Big Money signals

Below are the Big Money signals for GNRC since 2013:

Source: www.MAPsignals.com

Let’s examine a bit more. Generac has been growing nicely and has manageable debt:

  • 1-year sales growth rate (+12.7%)
  • 3-year earnings growth rate (+30.0%)
  • Debt/equity (+68.3%)

Our last growth candidate is an under-the-radar small cap, InMode Ltd. (INMD), which designs, makes, and sells minimally invasive and non-invasive medical products.

Check out these technicals:

  • 3-month performance (-49.7%)
  • Historical Big Money signals

InMode has lost nearly half its value recently, but believe me, it’s still a high-quality stock. It’s made the MAPsignals Top 20 report many times since it began trading in 2019:

Source: www.MAPsignals.com

Now look under the hood. InMode has been growing sales and earnings at HUGE clips for years, and its debt is almost non-existent:

  • 3-year sales growth rate (+58.4%)
  • 3-year earnings growth rate (+119.7%)
  • Debt/equity (+0.5%)

The Bottom Line

GOOGL, ADBE, MSFT, GNRC, & INMD represent top growth stocks to buy now for February 2022. Strong fundamentals and historical Big Money buy signals make these stocks worthy of extra attention for long-term investors.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions in GOOGL, MSFT, and INMD in personal and managed accounts.

Investment Research Disclaimer

https://mapsignals.com/contact/

 

QQQ: The Downside Risks on the Nasdaq Seem Exaggerated

The performance of the Nasdaq now encompasses a higher degree of volatility as seen by the 5.5 to 9% corrections in the Invesco QQQ Trust (QQQ) which has now become the new normal in a macroeconomic environment where hawkish Fed hiking interest rates is seen as being unfavorable to high-valued and unprofitable tech stocks.

Source: Initial chart from Trading View

For investors, QQQ tracks the Nasdaq-100 Index which features Apple (APPL), Alphabet A (GOOGL), Alphabet C (GOOG), Microsoft (MSFT), NVIDIA (NVDA), Meta labs (FB), Amazon (AMZN), Tesla (TSLA), Adobe (ADBE) and PayPal (PYPL). These are the main holdings out of a total of 102.

Assessing the risks

There are certainly risks in 2022 in the context of being invested in tech equities, but, I would like to bring to the attention of investors that despite all the volatility, QQQ has gained 6%, and this shows that the market’s repositioning (amid the rotation from growth to value names) does not seem commensurate with the forthcoming pace at which interest rates will increase.

Exploring further, trades are no longer crowded as in 2021 as people look for income or other asset classes to diversify. However, this diversification away from tech seems not to have hit QQQ’s main holdings which constitute 52.73% of the portfolio. As per my observation, this has been the case from April through December this year when most of the market gains were just from AAPL, MSFT, NVDA, TSLA, and GOOGL.

Source: Ycharts.com

Given the fact that the rotation has lacked in breadth, I see the corrections in tech as a rather muted market reaction, and this also prompts me to discard fears that tech stocks will suffer in the same way as during the bursting of the Internet bubble back in 1999-2000. At that time, in the first phase of the bear market, the large-caps names were doing fine but a large percentage of Nasdaq’s other components crashed by more than 50%. Ultimately, all the components crashed.

However, that was a completely different Nasdaq with the top stocks of the time being Cisco (CSCO) followed by Microsoft then Intel (INTC), or from the networking, software and semiconductor sectors respectively. Today, it is more about social media, online advertisement, internet marketplaces, electric cars, the cloud, smartphones, and virtual reality. In short, tech is now fully integrated into all spheres of economic and social life compared to twenty-two years ago.

Considering the inflation factor

Moderating slightly, QQQ’s other holdings seem to be impacted as investors become more selective, putting more emphasis on quality (free-cash-flow, balance-sheet, economic moat, etc) and valuations. Still, here also, rising inflation, currently at above 7% compared to 3.75% in 1999-2000 could prove to be more difficult for value stocks like banks as their customers suffer from rising prices and are faced with the rising cost of doing business. For this matter, as shown in the chart below, Bank of America (BAC) and Berkshire (BRK.B) saw a more pronounced dip in their total return level in August 2008 than Apple or Microsoft when inflation was above 5%.

https://static.seekingalpha.com/uploads/2022/1/14/49663886-16421719831560977.png

Source: Ycharts.com

Industrials are also likely to suffer from soaring raw material and labor costs. As for tech, they should better withstand high inflation with their ability to make use of software, AI, and automation tools more rapidly than companies from other sectors of the economy. These tools enable them to reduce operating costs and better circumvent wage inflation. Examples are FinTechs like PayPal’s (one of QQQ’s current underperformers) ability to reduce money transfer fees for customers compared to traditional banks and companies making use of cloud-based collaboration instead of having to invest in costly infrastructure.

Tech should continue to outperform as digital transformation enablers

Furthermore, with relatively less dependency on physical interactions caused by variant-related uncertainty, tech stocks are less likely to see a reduction in profitability. Here, some will note that Apple’s revenue share from its App Store ecosystem is increasing more rapidly than for devices and Tesla is considered as an internet-of-cars company.

Historically, as shown in the chart below, big tech’s gross profit margins have either increased or remained constant during the last five years, which include 2021, a year characterized by rapidly rising inflation.

https://static.seekingalpha.com/uploads/2022/1/14/49663886-16421723117351067.png

Source: Ycharts.com

Thus, inflationary pressures grappling the economy as from 2022 is likely to put valuations on the backstage, with tech, especially the more profitable ones, likely to continue seeing positive returns. This said tech remains highly dependent on semiconductors, a sector that needs to be watched closely for some short term pain when some of the big names report earnings on the last week of January. Finally, looking at the performance of the Nasdaq in 2020 and 2021 when it gained 43.64% and 21.39% respectively, even a 10-12% gain in 2022 would put it in positive territory.

Disclosure: I am long Apple. This is an investment thesis and is intended for informational purposes. Investors are kindly requested to do additional research before investing.

Why Adobe Stock Is Down By 9% Today

Adobe Stock Falls On Disappointing Guidance

Shares of Adobe found themselves under significant pressure after the company released its quarterly results.

Adobe reported revenue of $4.11 billion and adjusted earnings of $3.20 per share, mostly in line with analyst estimates.

In its earnings press release, Adobe noted that cash flows from operations reached a record $2.05 billion. The company has also stated that it repurchased 1.6 million shares during the quarter.

In the next quarter, Adobe expects to report revenue of $4.23 billion and adjusted earnings of $3.35 per share. For the full year, Adobe expects revenue of $17.9 billion and adjusted earnings of $13.70 per share.

Before the report was released, analysts expected that Adobe will report earnings of $14.26 per share in 2022, so the company’s guidance was well below analyst estimates.

Assuming Adobe’s earnings guidance is correct, the stock is trading at 42 forward P/E even after the recent pullback which took its shares from the $700 level to the $575 level.

What’s Next For Adobe Stock?

It remains to be seen whether the market is ready to tolerate weaker-than-expected growth when the stock trades at more than 40 forward P/E. While Adobe showed strong results, its shares became too expensive this year, so traders expected stellar results from the company.

While Adobe stock has already pulled back by almost 20% from highs that were reached in November, it is up by 15% year-to-date. The concentration of investors’ capital in a handful of successful tech companies has pushed Adobe’s valuation to high levels, so traders should be closely watching the market sentiment towards richly valued tech companies.

At this point, it looks that the market’s sentiment is shifting, and investors look ready to put more funds into non-tech stocks while taking money out of the biggest names in the S&P 500. If this emerging trend gets stronger, Adobe stock will find itself under more pressure in the upcoming weeks.

For a look at all of today’s economic events, check out our economic calendar.

Adobe on Track to Beat Q4 Earnings After Noisy Q3 Results

The U.S. multinational computer software company, Adobe, is expected to report its fiscal fourth-quarter earnings of $3.20 per share, which represents year-over-year growth of about 14% from $2.81 per share seen in the same period a year ago.

The San Jose, California-based software company would post year-over-year revenue growth of over 19% to $4.09 billion. In the last two years, the company has beaten earnings per share (EPS) estimates almost all the time.

Better-than-expected results, which will be announced on Thursday, Dec 16, would help the stock recoup recent losses. Adobe stock slumped 5.35% to $623.08 in pre-market trading on Tuesday. However, it surged over 25% so far this year.

Analyst Comments

“We expect a small FQ4 beat and a conservative FY22 guide that is reassuring enough and can be walked up over time. Current FY22 consensus ests look reasonable, even taking into account tougher comps from a strong FY21 that also included an extra week (53-week FY). Adobe (ADBE) remains a favourite, high-quality, large-cap name,” noted Brent Thill, equity analyst at Jefferies.

“With ADBE up 27% YTD vs S&P500 +24% and NASDAQ COMP.+20%, there is a slight positive bias to expectations, even with a ~10% pullback from its recent (11/22) peak of ~$700. We expect a small beat in FQ4, despite noisy Q3 results from software & internet peers, as ADBE’s guidance likely embedded some conservatism when it was set in late Sept after pronounced summer seasonality in FQ3 and as it should benefit from seasonal FQ4 strength and tailwinds from the MAX conference.”

Adobe Stock Price Forecast

Twenty-two analysts who offered stock ratings for Adobe in the last three months forecast the average price in 12 months of $725.95 with a high forecast of $820.00 and a low forecast of $670.00.

The average price target represents a 10.28% change from the last price of $658.30. Of those 22 analysts, 17 rated “Buy”, five rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $736 with a high of $954 under a bull scenario and $552 under the worst-case scenario. The firm gave an “Overweight” rating on the computer software company’s stock.

“Heading into FY22 we favour core franchises at reasonable valuation levels, like Adobe. We see improving DX growth, more so than DM, to pave the route to sustained ~20% growth. The initial FY22 guide likely proves conservative, but establishes a base from which ADBE can grind higher,” noted Keith Weiss, equity analyst at Morgan Stanley.

“Adobe has leading market share in some of the most dynamic secular growth areas in software: creative design, dynamic media, and marketing automation. As such, we see the longer-term growth story for ADBE as better than most. With a large recurring rev base and best-in-class operating margin, we expect ~18% EBIT CAGR from FY21-FY23 and believe this durable growth is not fully reflected in shares. Our $736 PT is based on 42x FY23e EPS of $17.33, which implies ~2.4x PEG on ~18% EPS CAGR from FY21-FY23e.”

Several other analysts have also updated their stock outlook. Credit Suisse initiated with a “Neutral” rating and set the target price of $700. Deutsche bank started with a “Buy” rating and set the target price of $770. BofA Global Research raised the price objective to $720 from $640.

Technical analysis suggests it is good to buy as 150-day Moving Average and 100-200-day MACD Oscillator signals a buying opportunity.

Check out FX Empire’s earnings calendar

Earnings Week Ahead: Lennar, Adobe, FedEx, Darden Restaurants and Fed’s Policy in Focus

Although next week’s earnings are unlikely to have much of an effect on major market movements, it is sufficient to gauge investors’ sentiment. The main event on the market will be the Fed’s policy announcement on Wednesday. After the central bank’s policy-making arm concludes its two-day meeting, all eyes will be on Jerome Powell, the Fed’s chairman, who will hold a press conference.

Earnings Calendar For The Week Of December 13

Monday (December 13)

Ticker Company EPS Forecast
PHX PHX Minerals $0.07

 

Tuesday (December 14)

Ticker Company EPS Forecast
CLSK CleanSpark $20.71

 

Wednesday (December 15)

IN THE SPOTLIGHT: LENNAR, FEDERAL RESERVE POLICY DECISION

LENNAR: The home construction and real estate company, is expected to report earnings per share of $4.15 in the fiscal fourth quarter, which represents year-over-year growth of over 46% from $2.83 per share seen in the same period a year ago.

The Miami, Florida-based company would post year-over-year revenue growth of more than 25% to around $8.5 billion. For four quarters in a row, the company has exceeded expectations on earnings per share.

In the fourth-quarter fiscal 2021, Lennar expects to build 18000 homes with a gross margin of 28%, according to Zacks research. The number of new orders is expected to range from 15,200 to 15,400 units, while the average selling price is forecast to be $445,000. As a percentage of home sales, SG&A expenses are likely to be 6.7%.

In a note to clients, Goldman Sachs analysts raised her price target for Lennar to $140 from $108 and upgraded it from neutral and buy to buy.

FOMC: On Wednesday, the Fed will likely announce an acceleration of its bond-buying program. Fed’s decision may also be influenced by consumer price inflation data, which hit nearly 40 years high in November.

“The concern at the Fed will be that high inflation today can fuel expectations of higher inflation tomorrow and the day after that and so on. This can then feed through into wage demands and in an environment of decent corporate pricing power we see those costs post onto customers,” noted James Knightley, Chief International Economist at ING.

“The Fed will be keen to avoid this (or be seen willing to tolerate it), hence our expectations for a faster taper next week, with the programme concluding in February. We also expect them to signal the prospect of two rate hikes in their “dot plot”, up from the one they currently have.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE DECEMBER 15

Ticker Company EPS Forecast
ABM ABM Industries $0.80
HEI Heico $0.59
LEN Lennar $4.15
TTC Toro $0.53
NDSN Nordson $2.10

 

Thursday (December 16)

IN THE SPOTLIGHT: ADOBE, FEDEX

ADOBE: The U.S. multinational computer software company is expected to report its fiscal fourth-quarter earnings of $3.20 per share, which represents year-over-year growth of about 14% from $2.81 per share seen in the same period a year ago.

The San Jose, California-based software company would post year-over-year revenue growth of over 19% to $4.09 billion. In the last two years, the company has beaten earnings per share (EPS) estimates almost all the time.

“Heading into FY22 we favour core franchises at reasonable valuation levels, like Adobe. We see improving DX growth, more so than DM, to pave the route to sustained ~20% growth. The initial FY22 guide likely proves conservative, but establishes a base from which ADBE can grind higher,” noted Keith Weiss, equity analyst at Morgan Stanley.

FEDEX: The Memphis, Tennessee-based multinational delivery services company is expected to report its fiscal second-quarter earnings of $4.24 per share, which represents a year-over-year decline of over 12% from $4.83 per share seen in the same period a year ago.

The delivery firm would post revenue growth of about 9% to 22.41 billion up from $20.6 billion seen a year ago. In the last four quarters, the company has beaten earnings per share estimates (EPS) only twice.

“After several negative catalysts in the Parcel space, momentum has (modestly) reversed in recent weeks. The question is can FedEx’s (FDX) print continue to build momentum or will we return to our prior pattern of disappointing updates? We believe consensus & guidance are still too optimistic,” noted Ravi Shanker, equity analyst at Morgan Stanley.

“We expect F2Q22 to come in below consensus. We are also below cons. for overall EBIT driven by misses in Ground and Express which are only partially offset by a beat in Freight. All in, we continue to believe the FY22 guidance cut from last quarter was not enough and see risk to F2Q and FY22 numbers as pandemic tailwinds die down.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE DECEMBER 16

Ticker Company EPS Forecast
ACN Accenture $2.63
JBL Jabil $1.80
SCS Steelcase $0.09
WOR Worthington Industries $1.72

 

Friday (December 17)

IN THE SPOTLIGHT: DARDEN RESTAURANTS

The Orlando-based restaurant operator, Darden Restaurants, is expected to report its fiscal second-quarter earnings of $1.44 per share, which represents year-over-year growth of about 95%, up from $0.74 per share seen in the same period a year ago.

The multi-brand restaurant operator would post year-over-year revenue growth of nearly 35% to $2.2 2 billion. In the last two years, the company has beaten earnings per share (EPS) estimates all the time.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE DECEMBER 17

Ticker Company EPS Forecast
WGO Winnebago Industries $2.36

 

Consumer Price Index: Key Focus This Friday

Consensus is calling for a headline number of +6.8% but estimates range as high as nearly +8%. Investors will be closely scrutinizing underlying details for signs that price gains are starting to look more permanent. This would be most evident in the so-called “core” rate that strips out food and gas prices.

After moderating somewhat this summer, the gauge made a substantial jump in October, indicating prices are climbing for a more broad range of consumer goods that are unlikely to be rolled back.

Inflation

The current wave of inflation is being fueled on several fronts, but primarily economists blame a lack of supply to meet booming consumer demand for goods. Some equate it to the same type of supply-demand mismatch witnessed following World War II when Americans were in the mood to spend but wartime rationing had left many products in short supply.

By 1947, inflation had jumped to over +20%. However, by the end of 1948 it was hovering just over +8%, and less than a year later the economy had flipped into deflation.

Some economists argue the resulting recession of 1948-49 was due to the central bank adopting policies to fight inflation even as it had already begun declining on its own. This is an example from history that more bulls have been citing in their arguments cautioning against the Fed moving too fast as it looks to curb the current bout of rising prices.

What that period did not have was the labor shortage that American businesses face today. Many bulls believe the currently fierce demand for workers is largely driven by pent up consumer demand that will likely begin to fade next year. There are concerns that the issue is a more fundamental shift that proves to be permanent, though, which could keep wage pressures in place longer-term and present a whole different set of problems for the Federal Reserve.

Data to watch

Next week, the central bank is expected to announce plans to accelerate the pace of its asset “taper” which would in turn move up the timeframe for interest rate hikes to begin. What bulls really want to see is assurances from the Fed that they will remain flexible and willing to adjust policy if the economy shows signs of stumbling.

The two day policy meeting concludes on Wednesday, 12/15, and will be followed up by a press conference by Fed Chair Jerome Powell. The central bank will also publish new economic projections which will include inflation forecasts and median range interest rate projections, aka the “dot plot.”

The previous September forecast projected the Fed’s short-term interest rate target at +0.3% for 2022, +1.0% for 2023, and +1.8% for 2024.

Other data set for release next week includes the Producer Price Index on Tuesday; Retail Sales, Empire State Manufacturing, Import/Export Prices, Business Inventories, and the NAHB Housing Market Index on Wednesday; and Housing Starts, the Philadelphia Fed Index, Industrial Production, and IHS Manufacturing on Thursday.

Next week also brings central bank policy updates from Bank of England and the European Central Bank on Thursday.

On the earnings front, next week’s highlights are Adobe, FedEx, and Rivian, all of which release results on Thursday.

Overall, I still think there could be more extreme volatility and downside risk into next week’s Fed meeting so I have a few short hedges in place. I suspect once we get past the Fed meeting and any possible knee-jerk there might be a more clear path for the bulls to run into yearend.

 

Big Money Has Designs on Adobe

So, what’s Big Money? Said simply, that’s when a stock goes up in price alongside chunky volumes. It’s indicative of institutions betting on the shares.

Smart money managers are always looking for the next hot stock. And Adobe has many fundamental qualities that are attractive.

This sets up well for the stock going forward. But how the shares have been trading points to more upside. As I’ll show you, the Big Money has been consistent in the shares all year.

You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way.

That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all the big money signals ADBE has made the last year.

The last few weeks have seen Big Money activity, too. Each green bar signals big trading volumes as the stock ramped in price:

Chart, histogram

Description automatically generated

Source: www.mapsignals.com

In 2021, the stock has attracted 10 Big Money buy signals. Generally speaking, recent green bars could mean more upside is ahead.

Now, let’s check out technical action grabbing my attention:

  • 1-month outperformance vs. Technology Select Sector SPDF Fund (+2.5% vs. XLK)

Outperformance is important for leading stocks.

Next, it’s a good idea to check under the hood. Meaning, I want to make sure the fundamental story is strong too. As you can see, Adobe has been growing sales at a double-digit rate. Take a look:

  • 3-year sales growth rate (+21.0%)
  • 3-year earnings growth rate (+49.7%)

Source: FactSet

Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term.

In fact, ADBE has been a top-rated stock at my research firm, MAPsignals, for years. That means the stock saw buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

ADBE has a lot of qualities that are attracting Big Money. And since 2015, it’s made this list 65 times, with its first appearance on 12/22/2015… and gaining 600.92% since. The blue bars below show the times that Adobe was a top pick since 2015:

Chart, histogram

Description automatically generated

Source: www.mapsignals.com

It’s been a top stock in the technology sector according to the MAPsignals process. I wouldn’t be surprised if ADBE makes additional appearances in the years to come. Let’s tie this all together.

The Bottom Line

Adobe rally could have further to go. Big money buying in the shares is signaling to take notice. Shares could be positioned for further upside. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a growth-oriented portfolio.

Disclosure: the author holds no positions in ADBE in personal or managed accounts at the time of publication.

Learn more about the MAPsignals process here.

Disclaimer

https://mapsignals.com/contact/

 

Adobe Stock Is A Big Money Favorite

Adobe Inc. (ADBE) stock has climbed steadily in 2021, jumping +30.0%. And it could be setting up for more highs soon as the software maker, known for the famous PDF file, also sells leading creative and engineering software that’s in high demand. But another likely reason is due to Big Money lifting the stock.

So, what’s Big Money? Said simply, that’s when a stock goes up in price alongside chunky volumes. It’s indicative of institutions betting on the shares.

Smart money managers are always looking for the next hot stock. And Adobe has many fundamental qualities that are attractive.

This sets up well for the stock going forward. But how the shares have been trading points to more upside. As I’ll show you, the Big Money has been consistent in the shares all year.

You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way.

That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all the big money signals ADBE has made the last year.

The last few weeks have seen Big Money activity, too. Each green bar signals big trading volumes as the stock ramped in price:

Chart, histogram

Description automatically generated

Source: www.mapsignals.com

In 2021, the stock has attracted 9 Big Money buy signals. Generally speaking, recent green bars could mean more upside is ahead.

Now, let’s check out technical action grabbing my attention:

  • 1-month outperformance vs. S&P North American Technology Software Index (+2.53% vs. SPGSTISO)

Outperformance is important for leading stocks.

Next, it’s a good idea to check under the hood. Meaning, I want to make sure the fundamental story is strong too. As you can see, Adobe has been growing sales at a double-digit rate. Take a look:

  • 3-year sales growth rate (+21.0%)
  • 3-year earnings growth rate (+49.7%)

Source: FactSet

Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term.

In fact, ADBE has been a top-rated stock at my research firm, MAPsignals, for years. That means the stock saw buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

ADBE has a lot of qualities that are attracting Big Money. And since 2015, it’s made this list 64 times, with its first appearance on 12/22/2015… and gaining 593.20% since. The blue bars below show the times that Adobe was a top pick since 2015:

Chart, histogram

Description automatically generated

Source: www.mapsignals.com

It’s been a top stock in the technology sector according to the MAPsignals process. I wouldn’t be surprised if ADBE makes additional appearances in the years to come. Let’s tie this all together.

The Bottom Line

The Adobe rally could have further to go. Big money buying in the shares is signaling to take notice. Shares could be positioned for further upside. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a growth-oriented portfolio.

Disclosure: the author holds no positions in ADBE in personal or managed accounts at the time of publication.

Learn more about the MAPsignals process here.

Disclaimer

https://mapsignals.com/contact/

 

Adobe Rock-Solid Ahead of Tuesday’s Confessional

Nasdaq-100 component Adobe Inc. (ADBE) reports Q3 2021 earnings after Tuesday’s closing bell, with analysts looking for a profit of $3.02 per-share on $3.9 billion in revenue. If met, earnings-per-share (EPS) will mark an 18% profit increase compared to the same quarter last year. The stock rose nearly 3% after beating Q2 estimates and raising Q3 guidance in June and has added another 16% since that time.

Leader in Digital Transformation

The Silicon Valley blue chip has been an outstanding performer in the last decade, rising more than twenty-fold, and is currently trading near an all-time high. The company is perfectly positioned to benefit from broad-based digital transformation, with a product catalog described by Mizuho analyst Gregg Moskowitz as a “highly comprehensive end-to-end offering that differentiates it from competitors and should enable it to drive more holistic sales across its clouds”.

Moskowitz raised the firm’s target to $695 and reiterated a ‘Buy’ rating on Friday, noting that, “Adobe is slated to report its F3Q (August) earnings results after the close on September 21. Our ADBE checks were once again favorable, and we expect the company to report healthy upside to our & Street estimates. In our view, ADBE’s expansive portfolio of software solutions has made it the gold standard in content creation, consumption, and collaboration”.

Wall Street and Technical Outlook

Wall Street consensus remains pristine despite Adobe’s 30%+ year-to-date return, with a ‘Buy’ rating fueled by 20 ‘Buy’, 2 ‘Overweight’, 4 ‘Hold’, and 1 ‘Underweight’ recommendation. No analysts are recommending that shareholders close positions at this time. Price targets currently range from a low of $550 to a Street-high $750 while the stock closed Friday’s session on top of the median $658 target. This placement suggests that stronger-than expected metrics will be needed to generate higher prices.

Adobe completed a breakout above 2018 resistance in November 2019 and tested new support successfully during 2020’s pandemic decline. The subsequent uptick mounted the February peak at 378 in June, generating a strong uptrend that stalled at 537 in September. The stock mounted that resistance level in June 2021, and has added points at a rapid pace since that time. Even so, long-term price projections show a cluster of hidden resistance just above 700, lowering reward and raising risk potential for new long positions.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

U.S. Tech Companies Disappointed with DACA Ruling, Urge Congress to Act

U.S. District Judge Andrew Hanen on Friday sided with a group of states suing to end the Deferred Action for Childhood Arrivals (DACA) program, arguing that it was illegally created by former President Barack Obama in 2012.

“We have long argued in support of this program, filing an amicus brief in this case, and we are very disappointed by the decision (from the judge)”, Google spokesperson Jose Castaneda said.

“Dreamers and immigrants make the United States — and Twitter — better”, a spokesperson from social media platform Twitter said in an emailed statement.

Twitter, Google, Microsoft and Photoshop maker Adobe urged the U.S. Congress to come together to protect Dreamers, with Google saying they wanted DACA to be “cemented” into law.

Microsoft President Brad Smith said that the “disappointing” ruling created “uncertainty yet again for Dreamers.”

The judge ruled on Friday that the program violated the Administrative Procedure Act (APA) when it was created but said that since there were so many people currently enrolled in the program – nearly 650,000 – his ruling would be temporarily stayed for their cases and their renewal applications.

Biden, who was vice president when Obama created the program, has said he wants to create a permanent pathway to citizenship for DACA recipients, known as “Dreamers.”

On Saturday, Biden vowed to preserve the program that protects from deportation hundreds of thousands of immigrants brought to the U.S. as children, promising to appeal the judge’s ruling invalidating it and urging Congress to provide a path to citizenship.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Kanishka Singh in Bengaluru, Editing by Nick Zieminski)

Adobe Shares Hit New Record High After Earnings Beat Estimates; Analysts Raise Target Price

Adobe shares scaled its fresh all-time high on Friday after the U.S. multinational computer software company reported better-than-expected earnings and revenue in the fiscal second quarter, prompting several analysts to raise their one-year price targets.

The San Jose, California-based software company reported quarterly revenue of $3.84 billion in its second quarter of the fiscal year 2021, which represents 23% year-over-year growth. That was higher than the Wall Street consensus estimates of $3.73 billion.

Adobe posted diluted earnings per share was $2.32 on a GAAP basis and $3.03 on a non-GAAP basis, beating the market expectations of $2.81 per share.

Adobe, one of the largest software companies, reported digital media segment revenue was $2.79 billion, which represents 25% year-over-year growth. Creative revenue grew to $2.32 billion, representing 24% year-over-year growth. Document Cloud revenue was $469 million, representing 30% year-over-year growth.

Adobe shares rose over 3% to a record high of $570 on Friday. The stock surged over 10% so far this year.

Analyst Comments

Adobe (ADBE) delivered a strong qtr w/ net new ARR growth of 17% handily beating our 3% est. DX growth of 21% beat our 18% est, aided by its largest deal ever and now marking two qtrs of outsized upside. And op margins were ~250bps above our est. All in, a very clean qtr and w/strong 3Q guide & commentary on confidence for a 4Q seasonal flush, it suggests demand trends are back in full swing. PT to $650,” noted J. Derrick Wood, equity analyst at Cowen.

“We think valuations remain attractive, particularly given growth momentum seems to be elevating. We increased our FY21 growth forecast from 20% to 22%. And we raised FY22E FCF/sh from $16.07 to $16.49.”

Adobe Stock Price Forecast

Twenty-one analysts who offered stock ratings for Adobe in the last three months forecast the average price in 12 months of $616.16 with a high forecast of $665.00 and a low forecast of $520.00.

The average price target represents 11.75% from the last price of $551.36. Of those 21 analysts, 18 rated “Buy”, three rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley raised the stock price forecast to $610 from $575 with a high of $770 under a bull scenario and $464 under the worst-case scenario. The firm gave an “Overweight” rating on the software company’s stock.

“Digital Media net new ARR additions beating consensus by 15% and accelerating to 17% YoY growth show building momentum in Adobe’s core earnings engine. With operating margins 200 bps ahead of consensus driving 24% YoY EPS growth, positive revisions should drive Adobe (ADBE) towards our increased $610 PT,” noted Keith Weiss, equity analyst at Morgan Stanley.

“Adobe has a leading market share in some of the most dynamic secular growth areas in software: creative design, dynamic media, and marketing automation. As such, we see the longer-term growth story for ADBE as better than most. With a large recurring rev base and operating margin improvements expected (as margin pressure from recent acquisitions comes to an end), we expect 25% EBIT CAGR from FY20-FY22 and believe this durable growth is not fully reflected in shares. Our $610 price target is based on 42x CY22e EPS of $14.56, which implies 2.1x PEG on 20% EPS CAGR from FY20-FY22e.”

Several other analysts have also updated their stock outlook on Friday. Evercore ISI raised the stock price forecast to $625 from $550. Bernstein lifted the target price to $638 from $577. Stifel increased the price objective to $600 from $550. Goldman Sachs upped the target price to $665 from $580. Cowen and company lifted the price target to $650 from $600.

BMO raised the target price to $630 from $585. Mizuho increased the target price to $640 from $600. Citigroup upped the price target to $575 from $523. Oppenheimer lifted the stock price target to $600 from $550. RBC increased the target price to $650 from $575. Jefferies raised the target price to $660 from $630.

Check out FX Empire’s earnings calendar

Best Stocks For July 2021

Here’s how I found the top stocks to own in July of 2021. I went to MAPsginals.com and I found all the Top 20 stocks since 2012. I then just sorted for the most frequently occurring stocks in descending order. This is what I found:

Source: MAPsignals.com

Outlier stocks are the ones that account for a lion’s share of the gains of the stock market. One thing they have in common is the same ones keep showing up over and over. These were the top 5.

To show why they are great quality stocks, I wanted some quick metrics. I looked up the following key fundamentals I look for:

  • 1 Year Sales Growth
  • 3 Year Sales Growth
  • 1 Year Earnings Growth
  • 3 Year Earnings Growth
  • Profit Margin
  • Debt/Equity

The best quality stocks being bought by big money is what I look for and these fit the bill. Look at these stunning fundamentals:

Source: FactSet

The real test is if Big Money is buying the stocks. By finding the ones most frequently on the Top 20 report, we get a quick filter for the best of the best. In order to even get on one instance of a MAP Top 20 report, the stock needs to have superior fundamentals and get some Big Money Buy Signals. The Top 20 stocks are the best 20 out of over 6,000 every week. So imagine what it means to be on a report 70 or 80 times!

Here’s what it looks like… below we are the instances when each stock saw Big Money buying and made our rare Top 20 report. The key to finding outlier stocks is the repeating Buy signals.

Up first is Facebook, Inc (FB):

Source: MAPsignals, end of day data sourced from Tiingo.com

Now, Align Technology, Inc. (ALGN):

Source: MAPsignals, end of day data sourced from Tiingo.com

And Fortinet, Inc. (FTNT):

Source: MAPsignals, end of day data sourced from Tiingo.com

Number 4 is Adobe Systems Inc. (ADBE):

Source: MAPsignals, end of day data sourced from Tiingo.com

Finally, NVIDIA Corp. (NVDA):

Source: MAPsignals, end of day data sourced from Tiingo.com

So there you have it: a power packed list of the best stocks for July 2021. I’d like to say this is a quick and dirty way to find the best stocks out there, but there’s nothing dirty about it. MAPsignals uses quantitative analysis of mounds of daily stock data. Thirty years of it says two clear things:

  1. Outliers keep appearing time and time again.
  2. When they do, those are the best in show.

When Big Money is buying the best quality stocks, we should always pay attention. But when they do it year after year, it’s a message we don’t want to miss.

The Bottom Line

FB, ALGN, FTNT, ADBE, & NVDA represent the best stocks for July 2021. Based on strong fundamentals and Big Money buy signals year after year, these are worth further investigation.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds no positions in FB, ALGN, ADBE, FTNT, & NVDA at the time of publication.

Investment Research Disclaimer

https://mapsignals.com/contact/

For a look at all of today’s economic events, check out our economic calendar.

Adobe Could Hit New All-Time High on Strong Q2 Earnings; Target Price $567

The U.S. multinational computer software company Adobe is expected to report its fiscal second-quarter earnings of $2.81 per share, which represents year-over-year growth of about 15% from $2.45 per share seen in the same period a year ago.

The San Jose, California-based software company would post year-over-year revenue growth of over 19% to $3.73 billion. In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 7%.

Adobe’s better-than-expected results, which will be announced on June 17, would help the stock hit new all-time highs. Adobe shares rose over 8% so far this year. The stock ended 1.07% higher at $541.26 on Friday.

Analyst Comments

“Upside to Digital Media net new ARR, positive checks in Digital Experience, and conservative operating margin forecasts for 2Q make us buyers into the print. Multiple rev growth engines and durable 20%+ EPS growth frames an attractive risk/reward for this solid secular growth franchise,” noted Keith Weiss, equity analyst at Morgan Stanley.

Adobe has leading market share in some of the most dynamic secular growth areas in software: creative design, dynamic media, and marketing automation. As such, we see the longer-term growth story for ADBE as better than most. With a large recurring rev base and operating margin improvements expected (as margin pressure from recent acquisitions comes to an end), we expect 20%+ EBIT CAGR from FY20-FY22 and believe this durable growth is not fully reflected in shares. Our $575 PT is based on 41x CY22e EPS of $13.96, which implies ~2.3x PEG on 16% EPS CAGR from FY20-FY22e.”

Adobe Stock Price Forecast

Twenty analysts who offered stock ratings for Adobe in the last three months forecast the average price in 12 months of $567.78 with a high forecast of $650.00 and a low forecast of $520.00.

The average price target represents 4.90% from the last price of $541.26. Of those 20 analysts, 17 rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $575 with a high of $698 under a bull scenario and $438 under the worst-case scenario. The firm gave an “Overweight” rating on the software company’s stock.

Several other analysts have also updated their stock outlook. Wolfe Research set an “outperform” rating and a $650.00 target price for the company. The Goldman Sachs Group reiterated a “neutral” rating and issued a $523.00 price target.

Bank of America reiterated a “buy” rating and issued a $570.00 price target on shares. Credit Suisse issued an “outperform” rating and a $575.00 price target for the company. Jefferies raised the target price to $630 from $560.

ADBE +8% YTD trails SP50 13% and peer INTU 24%, despite strong fundamentals (FY21 JEFe rev +20% with OM +150bp to 44%). Our expert calls have been very positive, especially for DX,” noted Brent Thill, equity analyst at Jefferies.

“These point to a decent size FQ2 beat (JEFe 2%+), though stock may need more to overcome headwinds affecting growth & software sectors and CFO transition uncertainty. Improving momentum into 2H could help turn around cautious sentiment. ADBE remains a top 4 large-cap software pick.”

Check out FX Empire’s earnings calendar

Earnings to Watch Next Week: Oracle, H&R Block, Lennar and Adobe in Focus

Earnings Calendar For The Week Of June 14

Monday (June 14)

Ticker Company EPS Forecast
PDCO Patterson Companies $0.51
EV Eaton Vance $0.92
MIK Michaels Companies $0.30

Tuesday (June 15)

IN THE SPOTLIGHT: ORACLE

ORACLE: The world’s largest database management company is expected to report its fiscal fourth-quarter earnings of $1.31 per share, which represents year-over-year growth of over 9% from $1.20 per share seen in same period a year ago.

The Austin, Texas-based computer technology corporation would post revenue growth of more than 6% to $11.07 billion. In the last four quarters, on average, Oracle has beaten earnings estimates about 6%.

Oracle’s current low valuation at ~14x CY22e EPS reflects its slower growth rate compared to peers. Despite potential opportunities within existing database customers and cloud-based ERP applications, offsets from waning businesses mean 2021 likely lacks the catalysts for the positive inflection in revenue growth investors would need to see to drive multiples higher,” noted Keith Weiss, equity analyst at Morgan Stanley.

“We see 16% EPS growth in FY21 and 6% in FY22, driven by an aggressive pace of share buybacks. However, cc revenue growth is ~2%, in a software sector filled with strong secular growth stories, and just 2% operating income growth points to Oracle potentially reaching peak margins, leaving us Equal-weight at our $73 PT.”

H&R Block: The largest tax provider in the U.S. in terms of offices and revenues is expected to report its fiscal fourth-quarter earnings of $5.07 per share, which represents year-over-year growth of over 68% from $3.01 per share seen in the same period a year ago.

The tax preparation company operating in Canada, the United States, and Australia would post revenue growth of over 32% to around $2.4 billion.

HRB’s core business of assisted tax prep has seen declining volumes over the last 8 years, which we expect to continue this year. We expect the assisted business to remain under pressure given the industry shift toward DIY offerings, with a modest offset from HRB’s own growing DIY business,” noted Jeffrey Goldstein, equity analyst at Morgan Stanley.

“Recent acquisition Wave Financial could be a driver of long-term upside but limited synergies and competitive market makes it hard to prove ROI. HRB generates a high degree of FCF with share buybacks driving double-digit-digit EPS growth in the out years of our model. The stock trades at an attractive normalized FCF yield which suggests the stock could re-rate significantly by improving volumes.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JUNE 15

Ticker Company EPS Forecast
ORCL Oracle $1.31
HRB H&R Block $5.07
AHT Ashtead Group £0.29
HDS HD Supply Holdings $0.34

Wednesday (June 16)

IN THE SPOTLIGHT: LENNAR

The Miami-based home construction company is expected to report its first-quarter earnings of $2.37 per share, which represents year-over-year growth of over 40% from $1.65 per share seen in same period a year ago.

The United States’ leading homebuilders would post revenue growth of about 17% to $6.16 billion.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JUNE 16

Ticker Company EPS Forecast
LEN Lennar $2.37
KFY Korn Ferry International $0.98

Thursday (June 17)

IN THE SPOTLIGHT: ADOBE

The U.S. multinational computer software company is expected to report its fiscal second-quarter earnings of $2.81 per share, which represents year-over-year growth of about 15% from $2.45 per share seen in same period a year ago.

The San Jose, California-based software company would post year-over-year revenue growth of over 19% to $3.73 billion.

Adobe has leading market share in some of the most dynamic secular growth areas in software: creative design, dynamic media, and marketing automation. As such, we see the longer-term growth story for ADBE as better than most,” noted Keith Weiss, equity analyst at Morgan Stanley.

“With a large recurring rev base and operating margin improvements expected (as margin pressure from recent acquisitions comes to an end), we expect 20%+ EBIT CAGR from FY20-FY22 and believe this durable growth is not fully reflected in shares. Our $575 PT is based on 41x CY22e EPS of $13.96, which implies ~2.3x PEG on 16% EPS CAGR from FY20-FY22e.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JUNE 17

Ticker Company EPS Forecast
JBL Jabil Circuit $1.04
ADBE Adobe Systems $2.81
KR Kroger $0.98
CMC Commercial Metals $0.84

Friday (June 18)

There are no major earnings scheduled

Best ETFs For June 2021

A portfolio of outlier stocks can become chock full of monster gains for years to come, if chosen wisely.

But wouldn’t it be great if there was already a collection of outliers we could buy without even having to think about it?

Well maybe there is a way to do just that… through outlier ETFs.

So, here I’m going to give you the best ETFs that big money is getting involved in this month.

First thing’s first: to find them, I looked at all the ETFs making Big Money signals. I did that by heading over to MAPsignals.com and then looked at the Big Money ETF Buys and Sells chart. I looked at days with the biggest buying, circled here:

Once I had all the ETFs, I wanted to know which were the best potential opportunities. ETFs are baskets of stocks. And because MAPsignals scores over 6,000 stocks every day, as long as I know which stocks make up the ETFs, I can rank them all.

Here are the 5 best ETFs with scores: The Composite score, Technical score, and Fundamental score. These were computed by accounting for each components stock’s score and its associated weighting in the ETF. (keep in mind that weightings will change from time to time)

Below we see each ETF, their recent Big Money activity, and their scores. XLF, ITB, and XLC are top ranked ETFs. That makes sense because financials, home builders, and communications stocks have been leading the market much of this year so far.

IGV and ARKG, however, rank low on our list of ETFs. But there is opportunity here because the low scores are due to weak technicals. Big Money has been selling these ETFs, largely because they are heavily concentrated in growth stocks. But these stocks have excellent fundamentals: growing sales and earnings and big profits. These weak ETFs represent great potential bargains.

Let’s quickly look at the year-to-date performance of these 5 ETFs:

  • XLF +29.3%
  • ITB +29.2%
  • XLC +13.5%
  • IGV -4.0%
  • ARKG -18.1%

Now let’s quickly look at Big Money buying in the ETFs. Each chart below has many green bars which represents unusually large buying. The few red bars represent unusually large selling. What jumps out is the huge buying in all the ETFs.

Only with IGV and ARKG, there was recent selling too. But again, selling on ETFs and stocks with great fundamentals represents a value opportunity.

Source: www.mapsignals.com, End of day data sourced from Tiingo.com

Here’s why I like these ETFs: they are highly concentrated with fundamentally superior stocks. Below we see a table of three stocks in each ETF. They are some of the highest weightings in each.

Notice their fundamental scores are very strong on a scale from 0-100. This means strong growing sales, earnings, and profits over one and three years. This is how MAPsignals boils down all its fundamental research into one elegant score.

Now with XLF, ITB, and XLC – we see the stocks also have strong technical scores. That means Big Money has been pouring into them, lifting them to new highs. They are buoyant with Big Money support. But in IGV and AKG, we see weak technical scores. This means Big Money has been exiting the stocks.

But before you get spooked, let’s keep the recent environment in mind: Growth has fallen out of favor while value and reopen stocks have become all the rage. But it’s essential to remember these growth companies create phenomenal products and services enhancing our lives. I don’t foresee that stopping in the future. The recent selling is temporary and thematic.

What really drives this home is looking at how long-term Big Money buying can lead to monstrous gains. Below are charts showing all the instances these stocks were Top stocks in our research since 2015: our weekly report of outliers. We don’t need to go into details on each chart.

I’d like you to notice a few things:

  • When Big Money buying pours in, stocks go up
  • Repeated outliers, especially for years often means outsized gains

Owning outlier stocks is the way I try to beat markets. Easy exposure to many stocks can be achieved by buying ETFs. But just like anything, you must be in the 1% if you want to be in the 1%.

We can find outlier ETFs by tracking the Big Money. But that alone isn’t enough: when we catalog the components and find outlier stocks underneath… that’s the winning recipe.

So, there you have it: the 5 best ETFs that Big Money has been trafficking in recently. Outlier ETFs hold outlier stocks. Finding them is the key to finding potentially outlier gains.

Now let’s look at what those look like:

Source: www.mapsignals.com, End of day data sourced from Tiingo.com

The Bottom Line

XLF, ITB, XLC, IGV, & ARKG represent top ETFs for June 2021. Financials, homebuilders, & Communications stocks have performed well lately, which should continue. Software and Genomics companies have reached interesting levels, too. Paying attention to the fundamental quality of ETF constituents is paramount.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions GOOGL, CRM, & REGN in managed accounts, but no positions in XLF, ITB, XLC, IGV, ARKG, BLK, SCHW, SPGI, DHI, LEN, LOW, FB, ATVI, ADBE, MSFT, TDOC, & VRTX at the time of publication.

Investment Research Disclaimer

Best Growth Stocks May 2021

The hallmark way we go about finding the best stocks…the outliers, is by looking for quiet Big Money trading activity.

Oftentimes, that can be institutional activity. We’ll go over what that looks like in a bit. But, the 5 stocks we see as long-term candidates are ACN, ADBE, CROX, RH, & RGEN.

For MAPsignals, we believe the true tell on the near-term trajectory of the stock lies in the trading activity of the stock. The bottom line here is that oftentimes the manner in which a stock trades can oftentimes alert you to the forward fundamental picture more so than by simply looking at a company’s financials alone. We want the odds on our side when looking for the highest-quality stocks.

Up first is Accenture Plc (ACN), which is a leading professional services firm. They have been cruising higher for years.

When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for ACN being:

  • YTD performance (+11.56%)
  • YTD outperformance vs. technology ETF (+.95% vs. XLK)
  • Recent big money signals

Just to show you what our Big Money signal looks like, have a look at all of the top buy signals ACN has made recently. It’s had a strong chart over the past few years, too. Green bars are showing that Accenture was likely being bought by a Big Money player according to MAPsignals. It’s clear there’s a lot of green historically with this stock. That’s exactly what you want to see when looking for a great growth name.

Chart, line chart Description automatically generated

Source: MAPsignals, End of day data sourced from Tiingo.com

On top of technicals, you need to look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Accenture’s numbers have been strong:

  • 3-year sales growth rate (+6.53%)
  • 3-year earnings growth rate (+13.1%)

Next up is Adobe, Inc. (ADBE), which is a leading software company. The company has been a huge winner over the years as they are extremely profitable.

When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for ADBE being:

  • YTD performance (+3.12%)
  • YTD vs. software ETF (-2.13% vs. IGV)
  • Recent big money signals

While the stocks has underperformed recently, look below. These are the top buy signals Adobe has made since 2017. Clearly the Big Money has been consistent for years:

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Source: MAPsignals, End of day data sourced from Tiingo.com

On top of a great long-term technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Adobe has solid fundamentals:

  • 3-year sales growth rate = +21%
  • 3-year earnings growth rate = +49.7%

Another growth name to consider is Crocs, Inc. (CROX), which is a leading footwear and apparel company.

When we decide on the strongest candidate for long-term growth, we want to see a history of big money buying the shares. A few technical areas we like for Crocs are:

  • YTD outperformance vs. market (+23.34% vs. SPY)
  • YTD outperformance vs. discretionary ETF (+24.14% vs. XLY)

Below are the big money signals CROX has made since 2017. After the pandemic lows, it’s been moon-bound:

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Source: MAPsignals, End of day data sourced from Tiingo.com

On top of a strong technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. Croc’s revenue growth rate is impressive. I expect earnings to rebound in the coming years:

  • 3-year sales growth rate = +10.67%
  • 3-year earnings growth rate = -585%

Number 4 on the list is RH (RH), which is a leading high-end retailer for the home. The shares have been in bull-mode the past couple of years.

When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for RH being:

  • YTD outperformance vs. market (+41.79% vs. SPY)
  • YTD outperformance vs. discretionary ETF (+42.59% vs. XLY)
  • Recent big money signals

Below are the big money signals that RH has made since 2017:

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Source: MAPsignals, End of day data sourced from Tiingo.com

On top of the technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, RH has been growing nicely:

  • 3-year sales growth rate = +5.31%
  • 3-year earnings growth rate = +2899.12%

Our last growth candidate is Repligen, Corp. (RGEN), which is a leading medical instruments and supplies company. They have been growing rapidly for years.

When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success with a few for RGEN being:

  • YTD outperformance vs. market (+2.77% vs. SPY)
  • YTD outperformance vs. healthcare sector (+5.8% vs. XLV)
  • Historical big money signals

Below are the big money signals Repligen has made since 2017. You can see how powerful the performance has been:

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Source: MAPsignals, End of day data sourced from Tiingo.com

On top of the technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Repligen has grown over the past few years:

  • 3-year sales growth rate = +37.39%
  • 3-year earnings growth rate = +41.8%

The Bottom Line

ACN, ADBE, CROX, RH, & RGEN represent top growth stocks for May 2021. Given the strong historical revenue & earnings growth, and multiple big-money buy signals, these stocks could be worth extra attention.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds no positions in any of the securities mentioned at the time of publication.

Investment Research Disclaimer

Adobe Reports Impressive Q1 Results; Target Price $563

Adobe, an American multinational computer software company, reported better-than-expected earnings in the first quarter and raised its full-year outlook on expectations that creative applications will drive growth this year.

The San Jose, California-based software company said its first-quarter revenue surged over 25% year-on-year to $3.905 billion, beating the Wall Street consensus estimates of $3.76 billion. Adobe’s digital media revenue rose more than 30% year-on-year and revenue from digital experience climbed 24%.

The software company reported adjusted earnings per share of $3.14 per share, which represents year-over-year growth of over 38% from $2.27 per share seen in the same quarter a year ago.

For the second quarter, Adobe forecasts revenue of $3.720 billion and non-GAAP EPS of $2.81. The company also raised guidance for fiscal 2021 revenue to $15.450 billion and non-GAAP EPS to $11.85.

Adobe shares, which surged over 51% in 2020, closed about 2% higher at $460.20 on Tuesday.

Analyst Comments

“A solid 6% beat in Digital Media ARR additions, Digital Experience revenues 4% ahead of consensus and op margins 270 bps ahead of the street yielded a 13% EPS beat in Q1 and a 6% raise of the FY21 EPS target. A durable multiple and EPS again ticking higher should drive ADBE towards our $575 price target,” noted Keith Weiss, equity analyst at Morgan Stanley.

“Historically Adobe does not often raise full-year guidance this early in the year. However, the 2% increase to FY21 target revenue also includes over 1 point from a more favorable FX impact, suggesting management isn’t getting too much more aggressive and there exists further potential for upside in an improving spending environment. On EPS, FY21 guidance was raised 6% or $0.65, reflecting a lower tax rate of 16% vs. 17.5% prior (a $0.20 benefit) and leverage on the higher revenue targets.”

Adobe Stock Price Forecast

Nine analysts who offered stock ratings for Adobe in the last three months forecast the average price in 12 months of $563.33 with a high forecast of $600.00 and a low forecast of $510.00.

The average price target represents a 22.41% increase from the last price of $460.2. Of those nine analysts, eight rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

“We see strength on all fronts of quarterly performance. New customer engagement levels remained strong and activity on adobe.com remains elevated as a result of the extended remote work environment. We think results continue to support our investment case that Adobe will continue to dominate the creative segment, and its well-rounded portfolio, including Magento and Marketo, position the firm as a digital marketing leader,” noted Dan Romanoff, equity analyst at Morningstar.

“Given results and guidance, we are raising our fair value estimate to $520 per share, from $500. As software has lagged early in 2021, we see shares as increasingly attractive.”

Morgan Stanley gave the base target price of $575 with a high of $698 under a bull scenario and $438 under the worst-case scenario. The firm gave an “Overweight” rating on the software company’s stock.

Several other analysts have also updated their stock outlook. Jefferies lifted the target price to $610 from $600. Adobe had its target price raised by equities research analysts at Goldman Sachs to $523 from $523. The brokerage currently has a “sell” rating on the software company’s stock.

Moreover, Griffin Securities reiterated a “buy” rating and issued a $597 target price. Royal Bank of Canada lifted their price target to $575 from $570 and gave the company an “outperform” rating.

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Adobe to Post Q1 Earnings, Revenue Growth of About 22%; Target Price $563

Adobe, an American multinational computer software company, is expected to deliver higher earnings and revenue for its fiscal first quarter on Tuesday, largely driven by a broader shift to digital marketing due to the COVID-19 pandemic and expectations of a recovery in digital advertisement spending this year.

San Jose, California-based software company is expected to report its first-quarter earnings of $2.79 per share, which represents year-over-year growth of about 23% from $2.27 per share seen in the same quarter a year ago. In the last four consecutive quarters, on average, the company has delivered an earnings surprise of 4.7%.

The software company’s revenue is expected to jump over 22% year-on-year to around $3.76 billion.

According to the ZACKS Research, Adobe forecasts year-over-year revenue growth of 26% from Digital Media. Digital Experience segment revenues are expected to grow 19% on a year-over-year basis, while Digital Experience subscription revenues are likely to increase 22%.

Adobe shares, which surged over 51% in 2020, closed 2.5% higher at $452.41 on Monday.

Analyst Comments

“Improvement in broad advertising spend & healthy channel checks support upside to forecasts as Adobe progresses through FY21. Combined with additional room for margin expansion, durable 20%+ EPS growth makes Adobe a keyway to play a secular growth franchise at a reasonable valuation,” noted Keith Weiss, equity analyst at Morgan Stanley.

“Adobe has leading market share in some of the most dynamic secular growth areas in software: creative design, dynamic media, and marketing automation. As such, we see the longer-term growth story for ADBE as better than most. With a large recurring rev base and operating margin improvements expected (as margin pressure from recent acquisitions comes to an end), we expect 15%+ EBIT CAGR from FY20-FY22 and believe this durable growth is not fully reflected in shares. Our $560 PT is based on 41x CY22e EPS of $13.59, which implies ~2.6x PEG on 16% EPS CAGR from FY20-FY22e.”

Adobe Stock Price Forecast

Nine analysts who offered stock ratings for Adobe in the last three months forecast the average price in 12 months of $563.33 with a high forecast of $600.00 and a low forecast of $510.00.

The average price target represents a 24.52% increase from the last price of $452.41. Of those nine analysts, eight rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

“Our Digital Media partner survey showed an improvement vs. last qtr w/ 58% meeting/beating targets, up from 50% last qtr. 2Q pipeline commentary was strong; FY outlooks were unchanged; outlook on Doc Cloud very encouraging. At ~29xEV/CY22E FCF, valuations are near trough levels & we think shares are poised for a bounce off of strong results,” noted J. Derrick Wood, equity analyst at Cowen and Company.

ADBE shares are down 10% YTD and we think valuations are attractive at 29x EV/CY22E FCF. We continue to see strong upside potential navigating through CY21, aided by an SMB recovery & growing tailwind for Doc Cloud. Reiterate Outperform & $600 price target.”

Morgan Stanley gave the base target price of $560 with a high of $680 under a bull scenario and $426 under the worst-case scenario. The firm gave an “Overweight” rating on the software company’s stock.

Several other analysts have also updated their stock outlook. Adobe had its target price raised by equities research analysts at Goldman Sachs to $523 from $523. The brokerage currently has a “sell” rating on the software company’s stock. Griffin Securities reiterated a “buy” rating and issued a $597 target price. Royal Bank of Canada lifted their price target to $575 from $570 and gave the company an “outperform” rating.

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