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Friday, May 22, 2009

4-Star Stocks Poised to Pop: Adobe

Based on the aggregated intelligence of 130,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, software maker Adobe Systems (Nasdaq: ADBE) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Adobe's business, and see what CAPS investors are saying about the stock right now.

Adobe facts

Headquarters (founded)

San Jose, Calif. (1982)

Market Cap

$13.65 billion

Industry

Application software

Trailing-12-Month Revenue

$3.48 million

Management

CEO Shantanu Narayen (since 2007)
CFO Mark Garrett (since 2007)

Return on Equity (average, last three years)

15.9%

Competitors

Apple (Nasdaq: AAPL)
Microsoft (Nasdaq: MSFT)

CAPS members bullish on ADBE also bullish on

Google (Nasdaq: GOOG)
General Electric (NYSE: GE)

CAPS members bearish on ADBE also bearish on

Amazon.com (Nasdaq: AMZN)
Starbucks (Nasdaq: SBUX)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS.

Over on CAPS, 1,607 of the 1,670 members who have rated Adobe -- some 96% -- believe the stock will outperform the S&P 500 going forward. These bulls include All-Star cibient, who is ranked in the top 10% of our community, and ametts1.

In March, cibient tapped Adobe as the multimedia software star:

Great balance sheet and an extremely attractive business model and moat. Not quite like the razor-and-blades physical product model, but they've really enmeshed Flash and PDF across the entire web -- meaning web designers and developers continue to use their Acrobat and Dreamweaver software packages, which are only a few of their software offerings.

In a pitch from one month earlier, ametts1 elaborates on even more of Adobe's franchises:

By controlling ubiquitous technologies like PDF and Flash, emerging new ones like Flex and Air, and a wide range of well-regarded applications like Photoshop, Dreamweaver, and Illustrator, Adobe stands to benefit from any form of technology growth -- whether on Mac or Windows, Desktop, Internet, or Mobile. Expect technology stocks to lead us out of the market doldrums, and [Adobe] should be right there with the best of them when it happens.

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