Adobe: a growth stock with a wide moat

Adobe already dominates the creative industries – now it’s expanding into ecommerce

Adobe icons on an iPad
Adobe: a must-have for creatives
(Image credit: © Alamy)

With interest rates and inflation rising, many growth stocks – particularly those not yet making profits – have seen their share prices sink. However, this pullback has also hit the prices of several high-growth, highly profitable software companies with wide moats that protect them against competition. This has created buying opportunities.

Adobe (Nasdaq: ADBE), a substantial company with a market cap of $234bn, is one such opportunity. Most people have used Adobe PDF files at one time or another. PDF (or portable document format) is used to present electronic documents in exactly the format that the creator wants. Almost everyone has Adobe Reader on their computer to read these files. The firm also produces Photoshop, a very popular image-editing tool that has become the industry standard for digital arts.

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Dr Mike Tubbs

Highly qualified (BSc PhD CPhys FInstP MIoD) expert in R&D management, business improvement and investment analysis, Dr Mike Tubbs worked for decades on the 'inside' of corporate giants such as Xerox, Battelle and Lucas. Working in the research and development departments, he learnt what became the key to his investing; knowledge which gave him a unique perspective on the stock markets.

Dr Tubbs went on to create the R&D Scorecard which was presented annually to the Department of Trade & Industry and the European Commission. It was a guide for European businesses on how to improve prospects using correctly applied research and development. He has been a contributor to MoneyWeek for many years, with a particular focus on R&D-driven growth companies.