One stock we weren’t able to cover that was a Cramer tout on CNBC’s MAD MONEY was Adobe Systems (ADBE). Cramer was out very positive on the stock and noted that ADBE rallied after it reported a great earnings number, but then it pulled back. Cramer thinks this is a golden opportunity to get into ADBE. He thinks it is a bit on sale and a great bargain. Cramer is also positive on the coming Acrobat 8, and the Macromedia deal is working for it.
In Cramer’s mind the stock should be at $46 or more and he thinks you should buy ADBE. ADBE closed up 0.4%at $41.45 on Tuesday, with a $25.98 to $43.22 52-week trading range. After Cramer touted the stock it was back over $42.00 in late hours trading. The trailing 50 P/E is actually a misnomer because the number is really better than that. With FY-NOV2007 estimates at $1.65, ADBE trades at a forward P/E of 25.3.
Cramer was dead right on everything except the "value". The stock still probably has some room to go before real valuations become an issue, so we won’t argue his point here. The acquisition of macromedia at the exact time it was made was only really seen as a great move by the industry insiders with a viewpoint that the scaled down video flash was going to really win. They were right, and that is the company’s growth engine now for web ads and web features on sites. Flash rocks many sites, and ADBE is the winner for it.
Jon C. Ogg
December 19, 2006
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