We recently published a list of 10 Best US Stocks To Buy For Foreign Investors. In this article, we are going to take a look at where Adobe Inc. (NASDAQ:ADBE) stands against other best American stocks to buy.
In the coming week, the resilience of the US stock market will be challenged as President Trump’s tariff plans and employment report reveal the actual condition of the economy. Price pressures led to the broader market ending the week on a loss, and the benchmark was in correction territory earlier this month. Market experts believe the economy is moving too fast, and there is much volatility, so it is hard to predict the outcome for the coming months. Trump set April 2 as the date he will announce several tariffs.
The Bank of America cautioned investors to prepare for a double-digit correction this year that will shake the stock market. The firm sees the broader market dipping to 5,000 if the economy takes a nosedive and unemployment peaks. However, BofA believes that if the benchmark hits 5,000, it can recover and close the year at 5,500. According to its base case, BofA expects stocks to finish the year higher, with the benchmark oscillating between 5,885 and 6,175 points. This indicates an upside of nearly 7% from present levels. Wall Street experts are also predicting a recession might be in the cards. Markets are currently fretting over soft economic data and awaiting the effect of tariffs.
While the economy is teetering and has investors on edge, some experts see buying opportunities in this market. Laura Champine, Senior Consumer Analyst at Loop Capital Markets, joined CNBC on March 14 and commented that markets are shaky, but there are opportunities in consumer discretionary stocks. This macro environment is suitable for some American companies that can quickly adjust, especially retailers with a loyal customer base and that do not rely on imported products. Some big-box retailers primarily make money from subscription fees, so tariffs don’t threaten their earnings. Moreover, Champine was also bullish on select cruise line stocks, even while the market generally pulls back from travel stocks for now since their cruises are booked for the next year in advance. So earnings won’t take a significant hit in the current environment. The analyst also recommended a US manufacturer of appliances, which has significantly plummeted. Still, she noted that this is the best time to buy because American manufacturers will likely fare well under the current government.
To put buying opportunities in perspective, Wall Street’s AI darling recently went through a slump. According to BofA, this could be an opening for investors who want exposure to semiconductors, GPUs, and AI. Similarly, Jim Lebenthal, Chief Equity Strategist at Cerity Partners, told CNBC on March 10 that the current market offers an excellent opportunity to pick up Magnificent Seven stocks since they’re trading at great prices.
A team of engineers and scientists collaborating at a workstation surrounded by their applications and solutions.
Our Methodology
To find the best US stocks for foreign investors, we started from the top of Insider Monkey’s Q4 2024 database to identify US stocks. Then, we checked for average upside potential for these stocks to understand what analysts were bullish on. To finalise our selection, we chose the top 10 US stocks owned by elite hedge funds, with an average upside potential of over 30% as of March 30. The stocks are ranked in ascending order of the hedge fund sentiment.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 117
Average Upside Potential as of March 30: 36.95%
Adobe Inc. (NASDAQ:ADBE) is an American computer software company that has three main segments – Digital Media, Digital Experience, and Publishing and Advertising. The company’s product offerings include Photoshop, Acrobat Illustrator, Lightroom, Captivate, Dreamweaver, and Creative Cloud, among others. On March 18, Adobe and Publicis Groupe announced they were extending their partnership. Adobe’s Firefly Gen-AI will be combined with Publicis’ intelligent system CoreAI to help businesses scale the production of personalized content, reach niche and specific audiences, and increase client engagement.
On March 19, BMO Capital Markets assigned an Outperform rating to Adobe Inc. (NASDAQ:ADBE) with a $495 price target. Analyst Keith Bachmann observed that the company has solid growth potential and technological capacity, compared to its current valuation. Adobe also offers robust operational efficiency.
For FY24, Adobe Inc. (NASDAQ:ADBE) did well financially, driven by strong demand for Creative Cloud, Document Cloud, and Experience Cloud amidst an AI-powered world. For the year, the company reported a revenue of $21.51 billion and an operating cash flow of $8.06 billion. For the fourth quarter, revenue increased 11% year-over-year to $5.61 billion, and diluted GAAP earnings per share came in at $3.79. Adobe bought back roughly 4.6 million shares during Q4.
According to Insider Monkey’s fourth quarter database, 117 hedge funds held stakes in Adobe Inc. (NASDAQ:ADBE), compared to 123 funds in the preceding quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the largest stakeholder of the company, with 2.10 million shares worth $937.3 million. Adobe Inc. (NASDAQ:ADBE) ranks 9th on our list of the best American stocks to invest in.
Overall, ADBE ranks 9th on our list of the best US stocks to buy for foreign investors. While we acknowledge the potential of ADBE to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ADBE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.