iBooyah.com Investment Matters

Adobe (ADBE). Like most of Silicon Valley companies, ADBE suffered when the dotcom collapsed in early 2000.  Only in the last two and half years has ADBE been able to pull itself together and delivered decent profit.  Abode Systems is well known for their Photoshop and Acrobat products. The company has dramatically grown its product offerings, largely through acquisitions.  ADBE competes directly with Microsoft on a lot of products, but ADBE holds a niche when it comes to publishing software.

As a user of ADBE products, we are very familiar with this company.  On a personal note, we prefer ADBE products over their competitors.  One thing to note is ADBE products are not cheap by any means; therefore ADBE's customers are largely Enterprise.  Very few individuals are willing to pay $400 for any software these days.  With that said, for ADBE to remain a successful company, Enterprise must be in spending mode.  The last couple of years have been great for ADBE as companies invested in new software and technology. This recent success is evident by their stock performance.  Looking over ADBE stock chart the last 3 years, the growth has been impressive. 

Again, the future outlook for ADBE rest on Enterprise spending. If we were invested in ADBE, we would be looking for any sign of economic weakness as this will definitely hurt ADBE bottom line.  Fortunately, the economy appears to be humming along nicely.  As a result, 2007 should be another good year for technology firms.

In respect to the stock valuation, ADBE is clearly expensive at $38.50.  Comparing ADBE to its competitors, ADBE is trading at a higher multiple than companies like MSFT and ORCL.  In this respect, ADBE is more risky as Wall St. is expecting more from this company.  We are not implying this is not a good company. All we are suggesting is at $38.50 ADBE is a bit on the risky side.  If you happen to have bought this stock a year ago (our congratulation!!), you might consider letting go some of your positions and lock in your profit. 

Southern Copper Corporation (PCU).  To those of you who have recently bought CPU, congratulation! You probably made a killing.  This is one of the best performing stocks largely due to high demand for copper and other metals. As with most natural resources, it is becoming scarce.  To put things into perspective, the government is planning to do away with the copper penny since the cost to produce them is getting out of hand. 

The demand for copper should continue to be strong in the foreseeable future as the world economy is predicted to continue growing. In terms of the stock outlook, it is questionable if it will continue to perform as it has been.  The question on whether one should take profit now if one have bought the stock six months ago and have earned above average return can only be answer by comparing your gains with your initial goal.  If it were us, the answer is quite simple; we would sell half of the positions and let the other half ride. 

Cameco Corp(CCJ).  The uranium industry appears to be an interesting one.  We found a site which list the current market price for Uranium.  As you can see, the spot price has been rising. The fact that Uranium is trading at $75 per pound in Feb. 2007, compared to $38.50 per pound a year ago clearly indicates this commodity is in great demand.  If CCJ can deliver on this product, they stand to make a killing.

Cameco also sells electricity through Bruce Powers Limited Partnership (BPLP).  According to their last quarterly earning, the company was hurt buy lower than expected electricity spot price.  As a result, the earnings were weaker than expected.  This will happen from time to time as electricity prices can fluctuate depending on demand.  Unfortunately, this time around BPLP was for a lack of better word, got the short end of the deal.

We looked over CCJ financials and they appear to be fundamentally sound. By that we mean there was no sign of “window dressing”. Revenue is recurring and debt is within acceptable range.  We also like the fact that Cameco also operates other businesses aside from mining. Diversification is important.

Evergreen Solar (ESLR) As far as we are concerned, solar power is the future.  We know demand for solar panel is very high throughout the country. In fact, in California there are incentives available to help homeowners if they wish to put install solar panels.  High demand couple with government support should help the industry.  Recent reports indicates manufacturers are unable to produce enough solar panels to meet the current demand. Therefore, the industry looks promising.

In respect to ESLR stock, it appears to have hit bottom at around $8. Now that oil prices are high again, ESLR and the other alternative energy companies might be poised to move up.  Therefore, it might be worthwhile to dip your toes back into ESLR again at current level. 

If you are interested in Solar Energy, there is another company we have been tracking for over a year now.  They are profitable and appear to doing quite well.  The company is SunPower (SPWR).  This stock has been on a tear and could go higher. You might want to check out SPWR.