Tech stocks started moving higher overall last week as inflation expectations dropped following the latest Federal Reserve meeting minutes. In the tech space, software companies offer excellent returns overall, as they require little (if any) physical production.
That keeps profit margins high. For corporate software, the trends are steady even as work trends oscillate between being remote or in office.
One such winner? Adobe (ADBE). The creative software company just trounced its earnings late last week, announcing a 23 percent rise in revenue. And earnings came in over $3 per share ahead of expectations of $2.81 per share.
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Even with shares at all-time highs, the company has underperformed the S&P 500 by nearly 10 points in the past year. Best of all, besides the double-digit revenue and earnings growth, the company sports a fat 40 percent profit margin. And it has a solid balance sheet, with as much cash as debt.
Action to take: Shares of this software giant are likely to keep trending higher. That’s good for shareholders, although the stock doesn’t pay a dividend.
With a current uptrend in place, a call option trade can fare well here. The September $620 calls, last going for about $9.00, offer high double-digit returns in the coming weeks if the current uptrend continues.
Disclosure: The author of this article has no position in the stock mentioned here, but may trade this company after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.