ADOBE SYSTEMS INC. $87.94 - Nasdaq symbol ADBE

ADOBE SYSTEMS INC. $87.94 (Nasdaq symbol ADBE; TSINetwork Rating: Average) (408-536-6000; www.adobe.com; Shares outstanding: 498.8 million; Market cap: $44.4 billion; No dividends paid) makes software that lets computer users create, edit and share documents in the popular PDF format. Graphic designers also use its programs to create print publications and web pages. In its fiscal 2015 fourth quarter, which ended November 27, 2015, Adobe earned $0.62 a share, up 59.0% from $0.39 a year earlier. Revenue jumped 21.7%, to a record $1.31 billion from $1.07 billion. In the latest quarter, the company added 833,000 Creative Cloud subscribers (net of cancellations). This service now has 6.2 million users, up 78.6% from a year ago. Adobe is also seeing strong demand for its newer cloud-based offerings, including Document Cloud, which lets users create, manage and sign online documents for a monthly fee. Revenue from its Marketing Cloud service, which helps advertisers make their online ads more effective, rose 6.7% in the latest quarter. Adobe spends a high 17% of its revenue on research, which helps it compete in its rapidly changing industry. However, the stock has gained 26% in the past year and now trades at a high 31.3 times the $2.81 a share the company will likely earn in fiscal 2016. Moreover, Adobe gets 40% of its revenue from outside the U.S., and the high U.S. dollar is a risk factor. Adobe is still a hold.

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Value Stocks

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One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

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