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You Could Have Made a 100%+ Profit on Adobe Using This Cutting-Edge Tool

Published 04/18/2024, 06:47 PM
ADBE
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  • Adobe stock has been in a downtrend since hitting all-time highs.
  • During the period preceding the downtrend, the stock had gained over 100%.
  • This raises the question: How can one sell a stock to lock in maximum gains before it heads lower?
  • Arm yourself with cutting-edge tools to outperform the markets with InvestingPro, and take advantage of an exceptional -10% discount!
  • Adobe (NASDAQ:ADBE) stock has lost 25.6% since peaking out at $638.25 on February 2. The latest quarterly results, announced after the market closed on March 14, significantly contributed to this decline, with shares plunging by 13.67% in the session following the announcement.

    However, it's essential to remember that this drop of over a quarter in the share's value in two and a half months comes after an even more remarkable upward trend.

    Indeed, Adobe shares surged by more than 132% during the bullish phase before this current correction, between the October 2022 low of $274.73 and this year's peak of $638.25.

    The stock greatly benefited from the AI-related investment boom, with the photo software specialist being seen as a significant potential gainer due to the various possible applications of AI in its software.

    How to spot stocks that are going to take off BEFORE they take off?

    However, while it's easy to explain bullish trends and stock reversals after the fact, what's most important for investors is to know which tools can help them spot stocks that are likely to explode and whose potential has NOT yet been realized.

    InvestingPro's fundamental analysis and stock market strategy platform provide an interesting answer to this question, with its Fair Value.

    InvestingPro Fair Value offers a precise target for each stock on the market, based on the synthesis of several recognized valuation models.

    Up to 15 models can be taken into account, but not all models are relevant to all stocks, so InvestingPro applies only the models that are relevant to the profile of each stock.

    In practice, this is how it looks on the InvestingPro platform:

    Fair Value Adobe

    Source : InvestingPro

    Advanced users can also customize the calculation of Fair Value by choosing which models are taken into account and which are not.

    And in practice, Fair Value has already enabled InvestingPro users to take advantage of several particularly lucrative opportunities.

    A good example is Adobe, whose Fair Value was $521 at the beginning of November 2022, when the stock was worth $316, suggesting at the time a 65% upside potential for the stock.

    You could have benefited from a +100% gain on Adobe thanks to Fair Value

    But it was precisely in November 2021 that the stock began to turn upwards, giving rise to the powerful uptrend that continued until February 2024, and which we mentioned at the start of this article.

    Between November 2022 and February 2024, the Fair Value was regularly re-evaluated upwards, taking into account financial updates and other data, to finally reach $609 on February 2, 2024, the date on which the share became overvalued according to InvestingPro models.

    And it was precisely at this point that the stock marked its annual high, then reversed downwards, to enter the negative trend that is still with us today.

    In other words, InvestingPro users were warned not only of the opportunity to buy the stock in November 2022, but also of the need to part with it in February 2024, allowing them to profit from almost the entirety of an uptrend that stretched over a year and a half, and resulted in an advance of over 100%.

    Adobe Weekly Chart

    However, since its February peak, Adobe's share price has fallen much faster than its fair value, so much so that the latter is once again indicating a bullish potential for the stock, with a target of $548.56, i.e. 15.6% above Wednesday's closing price.

    This is still not enough for the stock to be considered undervalued according to InvestingPro criteria, which consider the share price to be "fair" at present.

    However, it should at least encourage investors to keep the Adobe stock on their radar, to identify the bottom of the current downtrend, and then consider positioning themselves for a buy using InvestingPro's Fair Value as a target!

    If you haven't already subscribed to InvestingPro, now's the perfect time to do so: for a limited time, we're offering a 10% discount to our readers, using the promo code ACTUPRO, which you can enter on the payment page.

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    Disclaimer:This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple points of view and is highly risky and therefore, any investment decision and the associated risk remains with the investor.

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