Adobe Shares Surge With Massive Demand Right Now
A 6.04% gain in 2020 for shares of Adobe Inc. (ADBE) has a lot of money written everywhere. This purchase is quite recent, and as the software company continues to make big profits, shareholders could be rewarded handsomely. We believe that the rush for this stock is happening now.
A great way to discover tomorrow’s winners is to look for big stocks that see big buying activity, and Adobe might just be the opportunity. Smart money managers are always looking to bet on the next outlier stocks … the best in its class. For Mapsignals, it is not enough to look at the technical aspects and fundamentals alone. The key lies in the demand for stocks grande the big money.
I’ll get into the fundamental picture later, but the real information about a stock’s short-term trajectory lies in its trading activity. Simply put, it’s about supply and demand. When demand is higher than supply, the stock rises. When demand is lower than supply, stocks fall. Since the fourth quarter of 2019, Adobe has seen relentless demand-that is, large purchases. As the company increasingly demonstrates commitment on its platforms, the focus appears to be on the next higher stage for equities.
For Mapsignals, when we look for an entry into a leading stock, we look for big money signals. Just to show you what our big money activity signals look like, take a look at all the big money signals (unusual institutional) that Adobe Stock has done over the past year. Focusing on 2019, you can see a lot of (Green) buy signals throughout the end of the year. What is happening now is a great buy running:
Chart showing unusual institutional buy and sell signals made by Adobe Inc. (ADBE)
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Since November, Adobe has recorded six big money buy signals, indicating the purchase of shares (see chart above). This shows that traders are probably thinking that stocks are about to rise. These data points suggest that the big money appetite for action is high.
If you are going to make a bet in the direction of a stock, it is wise to pay attention to how the shares are traded. According to the story, the odds suggest that Adobe shares are primed for profit. Big money is always looking for an opportunity to buy shares on the cheap. It’s about playing the odds by not fighting the trend.
The goal of Mapsignals is to identify the main actions of Tomorrow Today. Basically we are looking for atypical companies with healthy foundations accompanied by big money signals (oversized institutional activity). We are looking for big money bets because big money moves stocks. By studying these data points, we can make an educated guess as to which stock institutions are trafficking in and marrying this information with fundamentally sound companies. We want the odds on our side in the pursuit of higher quality stocks.
When we decide on a long candidate, we consider leaders who have a track record of technical superior performance. When they show leadership, we see these as opportunities. The following are some areas where Adobe Stock has captured our attention year to Date (YTD):
YTD outperforms market: + 2.91% vs. SPDR S & P 500 ETF (SPY)
YTD superior performance vs. ETF technology:+.09% vs. Technology Select Sector SPDR Fund (XLK)
Recent big money buying signals
Now, we take it a step further and write down the best stocks that show great money trading activity. Below you can see that Adobe has a rich history of buy signals for Mapsignals since 2018. The main conclusion is how buy signals tend to keep appearing. We believe a new round of buy signals could be upon us soon:
Chart showing the Best Buy signals made by Adobe Inc. (ADBE)
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In addition to a long-term technical landscape that is strong, one should also look under the hood to see if the fundamental landscape supports a long-term investment. As you can see, Adobe’s profit growth is very strong and its revenue growth rate is impressive. We believe the software ramp will keep the revenue growth rate high:
Three-year income growth rate: +24.17%
Three-year earnings growth rate: +38.28%
Adobe shares are exploding as the market breaks to new highs. The company is quietly gaining on the demand for its shares. We like the long-term story of the action. Adobe’s narrative is that engagement is growing and profits are still falling to the bottom line.
We are always on the lookout for big companies pushing more year after year. The best companies in a group tend to outperform in the long run. Major software stocks have been a strong group in recent years. All this points to a long-term opportunity for action.