2 unstoppable stocks to buy now and keep forever
When analyzing a stock, it can be helpful to consider many different variables, but one of the most important is the competitive position of the business. By definition, a market leader owns the largest fraction of total sales in any given industry – that’s good for sales. But there are also less obvious advantages. For example, a market leader often has a stronger brand, more customers, and more data than their competition, and that scale can grow stronger through profitability.
Building on this idea, intuition (NASDAQ: INTU) and Adobe (NASDAQ: ADBE) They may not be the hottest names on Wall Street, but both companies have established themselves as leaders in growing industries. This should translate into above-market earnings for shareholders over the long term.
Here’s what you need to know.
Adobe is a giant in two different verticals of the software industry. Its Digital Media business includes applications for creativity and document workflows, including benchmark standards such as Photoshop for image editing, Premiere Pro for filmmaking, and Acrobat for PDF management. And its Digital Experience business includes a suite of software and services for analytics, marketing, and commerce.
While Adobe is best known for its authoring software, Forrester Research recently recognized the company as a leader in corporate marketing and content management, and Gartner named Adobe the leading player in the digital experience industry, citing its brand recognition and broad ecosystem of partners as key differentiators.
Not surprisingly, Adobe delivered strong financial results like clockwork.
Q3 2019 (TTM)
Q3 2021 (TTM)
$ 10.6 billion
$ 15.1 billion
Free movement of capital
$ 3.8 billion
$ 6.6 billion
Adobe’s culture of innovation is one of its greatest assets. Rather than resting on its laurels, the company continues to create new products and implement new technologies. For example, Adobe Sensei is an artificial intelligence engine that supercharges its software, automates tasks for creative professionals, targets content for marketers, and personalizes recommendations for sales teams.
Likewise, Adobe’s creative application palette continues to evolve. Substance 3D is a software and content ecosystem for 3D designers, and Aero empowers artists to create immersive augmented reality experiences. To that end, Adobe’s ability to stay at the forefront of technology should make it a key player in emerging trends such as the metaverse, and should help the company to further seize its huge market opportunities, a number that, management believes will reach $ 147 billion by 2023. That’s why this stock is a smart buy for long-term investors.
Intuit is the gold standard in accounting and tax preparation software. QuickBooks helps small and medium-sized businesses (SMBs) and the self-employed track their expenses, manage payroll, and accept payments; and QuickBooks Live matches clients with professional accountants, allowing them to offload accounting tasks onto experts. Collectively, Intuit is by far the industry leader in the United States, with a 77% market share in accounting software.
Intuit’s portfolio also includes TurboTax, software that helps consumers file state and federal income taxes. During the 2021 tax season, the company extended its rock-solid leadership in this industry, increasing its market share by 10 percentage points to 73%. And similar to QuickBooks Live, TurboTax Live allows consumers to get advice from tax professionals.
Either way, management sees connecting clients with financial experts as a significant opportunity, and these products underscore Intuit’s goal of becoming an AI-driven expert platform. On that note, the company has also infused its software with artificial intelligence. For example, Intuit uses an AI technique called knowledge engineering to convert written tax regulations into computer code, and it uses natural language processing to create intelligent chatbots.
Given Intuit’s strong financial performance, it is fair to say that its growth strategy is paying off.
Q1 2020 (TTM)
Q1 2022 (TTM)
$ 6.9 billion
$ 10.3 billion
Free movement of capital
$ 2.2 billion
$ 3.2 billion
Intuit recently acquired Mailchimp, the second most popular sales and marketing platform behind Selling power, according to OktaThe 2021 Business at Work report from 2021. The move could boost its QuickBooks portfolio, giving SMEs the tools they need to attract and retain customers.
Intuit also recently acquired Credit Karma, a platform that connects consumers to financial products such as loans, credit cards, and insurance. According to CEO Sasan Goodarzi, this will allow Intuit to create a “mobile personal financial assistant”. The move will also create synergies with other products, allowing consumers to deposit tax refunds directly into high-yield savings accounts through Credit Karma Money.
Collectively, Intuit values its market opportunity at $ 260 billion, and with management’s strong growth strategy already paying off, this action looks like a great long-term investment.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.