The stock market has rebounded strongly in the past few days. While fears of inflation and other issues may cause a few more drops in the weeks and months ahead, many tech names have fared worse than the overall market.
Investors waiting for an entry point are looking at a decent one for many tech stocks, particularly big-name companies that can likely continue growing strongly no matter what happens with the economy.
One example is Adobe (ADBE). The company just beat on its latest earnings report, but its forward guidance came in a little lower than expected.
Nevertheless, the company is now trading at just 30 times forward earnings, compared to over 47 times forward earnings just over a year ago. Plus, the recent selloff has caused shares to drop, with the stock now slightly down over the past year, far lagging the rest of the market.
Action to take: With revenue up 20 percent over the past year and with a fat 31 percent profit margin, this big-tech software play can deliver for shareholders on a rebound in the tech sector. The only downside for investors in shares is that the stock doesn’t pay a dividend.
For traders, the stock will likely shake off the poor guidance and continue moving higher in the coming months given how oversold markets are. The June $550 calls, last going for about $6.50, offer mid double-digit gains on a move higher in shares in the coming weeks. Traders should look for a quick profit given today’s volatile markets.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.