I’ve seen a lot of headlines about how the stock market is expensive. That may be true, but the market is made up of thousands of individual companies trading at different prices and valuations at any given time there is a deal.
And no, you don’t have to scour the market to find a bargain. Meta platforms(NASDAQ: META) and: Adobe:(NASDAQ: ADBE) are some of the most popular tech companies in the world, yet their shares are priced right for buyers today.
Although the two stocks are trading at similar affordable valuations, they’ve had very different years. Meta is trading near all-time highs, while Adobe is down 30% shopping for 2025.
Most stocks don’t appear on such buy lists after appreciating nearly 400% in two years.But Meta Platforms is structured differently use social media apps like Facebook, Instagram, and Threads every day.The company will generate about $163 billion in revenue this year. which is almost 21% higher than in 2023. Meta is very profitable, with about one-third liquidating as free cash flow.
The stock price can’t seem to keep up with Meta’s earnings. The stock is trading at a P/E of 26 today, even after its epic jump. Meanwhile, analysts estimate the company’s long-term (three to five years) earnings growth of nearly 18%. %.That’s a PEG ratio of 1.4.I’m happy to buy high quality stocks with a PEG ratio of up to 2 or 2.5, so Meta is a bargain The company’s ad business is buoyant with a long growth runway ahead as global ad dollars continue to shift from legacy media to online and social media.
Meta is also a huge player in artificial intelligence (AI), which is almost icing on the cake at the moment. still not making any money. Assuming this eventually happens, it could add a new level of growth to an already excellent business.
Adobe is one of the world’s largest technology companies offering cloud-based creative software, including:
Creative cloud. design, image and video creation and editing tools
Document cloud. a platform for creating and editing PDF documents
Experience Cloud. tools and services for marketing and customer relationship management (CRM)
The company generates $21.5 billion in annual revenue, more than 36% of which it converts to free cash flow Canva and Figma are booming. Adobe even tried to acquire the latter, but backed out of the deal due to regulatory scrutiny.In addition, generative AI has become capable of creating high-quality images from worded prompts, leading some to wonder if AI will eventually replace Adobe. to some products.
Investors shouldn’t ignore potential disruptors, but the stock may be overreacting. AI can create images, but it’s far from nuanced and currently unable to replace Adobe’s well-developed technology. Additionally, Adobe is already integrating is AI technology in its products. AI may end up improving Adobe’s business, not hurting it.
AI will improve over time, but it’s still a long leap to fully replace all of Adobe’s collective tools and capabilities. Meanwhile, the business is still growing revenue by nearly 10%, and analysts expect annual revenue growth to be flat over the long term. average of 15%. The stock’s PEG ratio is 1.5 today, which highlights the current attractiveness of the stock. Investors who buy Adobe should watch for signs that AI or competition has impacted the business.For now, Adobe deserves the benefit of the doubt.The stock’s decline is a buying opportunity worth passing on.
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Randi Zuckerberg, former CMO and Facebook spokesperson and sister of Meta Platforms CEO Mark Zuckerberg, serves on The Motley Fool’s board of directors. Justin Pope has no position in any of the listed stocks.The Motley Fool has positions and offers Adobe and the Motley Fool has a disclosure policy.
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