Following yesterday numbers the market is walking through green pastures. It is hard to tell how much of it is an actual positive reaction following to 2 consecutive red weeks and how much is speculation. There are 2 stocks, in particular, that are stealing headlines today: Adobe and Apple. The first one will be presenting their earnings today and the second one is having their always anticipated September announcement. So, what should we expect?
(NASDAQ: ADBE): Adobe is one of the 5 largest software companies in the world. Founded 37 years ago, the company has grown year after year to become the leading software distributor for creators. How have they done in 2020 can give us a glimpse forward.
- 2020 has a been hit or miss for many companies, Adobe has gotten tail winds from the COVID-19 situation and quarantine days. In Q1 and Q2 the company reported 19% and 14% YoY growth in revenue, respectively.
- Their biggest segments have been benefited by our new way of living. Digital signatures, cloud storages and digital meetings have become part of our day to day.
- Digital Media and Digital Experience rely heavily on subscriptions with Adobe Creative Cloud and Experience Cloud. The company reported on June 11th that the first was growing 18% and the second one 5% YoY.
- Their balance sheet is outstanding: 30.7% Net Profit Margin, 35.6% Return on Equity and their Net Income has been growing for over 5 years now. Their only concern could be a low Debt to Equity Ratio due to aggressive acquisitions but so far, they are paying off.
- Finally, since September 10th at least 5 analysts have upgraded their price tags on Adobe while rating them as a Buy. There are reasons to expect another record quarter but stay tuned to the market before jumping in.
($128.21|0.09%): No need to introduce Apple. They recently peaked at a $2 trillion dollars valuation, first company to get there. Usually at this time of the year they are very busy in Cupertino presenting us new toys. Today is one of those days.
- It is no secret that the new Apple Watch will be presented today. In its short 5-year history the gadget has become the clear leader in the Smart Watch category. In 2019 it outsold all the entire Swiss Watch industry. There are no reasons to believe this new series will perform any differently.
- New iPads are coming to town. After the iPad Pro ARM migration, we should also expect these to be faster, leaner and with a larger battery spam. How much more performance is what will determine more likely how well they will sell. It is important to clarify that Apple has seen an increase in iPads demand as working from home has become a reality.
- There will be no iPhone presented today. Due to delays in shipments from China it seems that Apple first 5G phone presentation will be delayed to October. This is by far Apple's flagship product and it will be missed, unless ...
- Today's event is supposed to last 2 hours, which is longer than usual. There are rumors of a surprise announcement coming today. Some have mentioned to be the iPhone, however multiple Apple followers' blogs are mentioning that a bundle for Apple Services will be introduced following the logic and success of Disney with the Disney+, Hulu and ESPN bundle. Will there be appetite for it? I think so.
Both stocks should be benefited from today events. (NASDAQ: ADBE) should present strong results that would boost investors' confidence towards the stock even in today's market. Apple, on the other hand, are marketing geniuses that even without their "Golden Boy" in the billboard should press the right keys to get us excited.
Disclaimer: I am long on ADBE. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.