I can count the cheap technology stocks on one hand.
Out of a thousand names, almost nothing qualifies as a buy right now. Valuations stretched beyond reason. Multiples that would make any fundamental analyst cringe.
Then an analyst came out this weekend and said something I actually agree with. Adobe is cheap.
I use Adobe every single day. We all do. The company has a monopoly on publishing, printing, and Photoshop. They're pyramiding earnings quarter after quarter. And the stock keeps falling.
That disconnect is your opportunity.
The Genesis COG Scanner finds exactly these setups where fundamental value diverges from price action.
In my latest video, I show my steps from identifying setups to trade execution.
You’ll learn how Wall Street has rigged the game with its algorithms, and how Genesis COG exploits this fatal flaw.
Click Here to watch my latest video.
The Numbers That Matter
Pull up Adobe's earnings progression.
From 481 to 554. Quarter after quarter, earnings keep climbing while the stock keeps falling.
Add it up yourself. They've made about $21 a share this year. Divide that by the current price of around $358. You're looking at roughly 16x earnings. Maybe 17x.
That's value…Real value in a sector where everything trades at 40, 50, 60x earnings.
The company still has about 20% collective growth going forward for a couple of years. They're trading at a discount to their own growth rate.
In any rational market, this stock would be climbing.
The December Problem
Adobe started the year at $550. It now trades at $358.
That's the entire problem. Money managers need pretty charts for year-end reviews. They need to call clients in January and point to returns. If Adobe shows up in their portfolio, they're fired. Dismissed. Gone.
Everything has to look like it's on a 45-degree angle right now. NVIDIA qualifies. Palantir qualifies. Adobe does not.
So they sell it. Not because the business is broken. Not because earnings collapsed. Because the chart looks ugly heading into December 31st.
I call this the financial porn problem.
Wall Street has become so obsessed with technical appearances that nobody does fundamental research anymore.
A 16 PE with 20% forward growth should attract buyers. Instead it attracts selling because the three-year chart slopes the wrong direction.
Multiple Compression Has Limits
Here's what's actually happening beneath the surface.
Every quarter earnings rise and the stock falls. They're compressing the multiple. That compression has to end somewhere.
Eventually the multiple hits rock bottom. Then it expands. The analyst who put out this weekend's call deserves a raise. I hate virtually every analyst recommendation I see. This one I'm completely on board with.
When January hits and money managers wipe the slate clean, they hunt for value. Adobe sits right in that sweet spot. Beaten down. Undervalued. Earnings growing. The same managers avoiding it today will chase it in three weeks.
How To Position
Set yourself a stop around 300 to 320. Sell puts on this. Buy calls. Give yourself eight to nine weeks of runway.
This stock won't move right now. December mechanics won't allow it. But at some point the market recognizes that a monopoly business growing earnings at 20% shouldn't trade at 16x.
Even at $358, the stock has already bounced $40 off its lows. I think it moves a lot higher from here. Low downside. Lots of upside. Value built into the trade with growth to back it up.
That's exactly what the Genesis COG System is designed to identify. Fundamental opportunity hiding beneath technical damage.
See how Genesis COG identifies value setups before the crowd notices →
Professor Jeffrey Bierman
Creator of the Genesis COG System