To Catch a Falling Knife: Adobe, The Trade Desk and Accenture
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UPGRADE- Powell scares market with talk of high equity valuations.
- Adobe stock offers a nice entry at $275 if shares continue their decline.
- After a 60% YTD decline, The Trade Desk is a good bet at $40.
- Bulls should hit the buy button on Accenture at $213.
US stocks faltered on Tuesday after Federal Reserve (Fed) Chair Jerome Powell said the equity market was "fairly highly valued". In a speech at the Greater Providence Chamber of Commerce, Powell stated that rising inflation and a weakening labor market have led to a situation in which there is "no risk-free path."
Markets sold off on that news, sending the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) from gains to -0.3% and -0.6% performances. The NASDAQ (IXIC), already trending a bit glum, sank to a -1.0% pullback.
Much of that pessimism, however, surrounds the high-flying growth stocks that have risen swiftly since the April lows. Many value stocks have gained ground, such as UnitedHealth Group (UNH), since they are viewed as safe havens in a storm. Gold and US Treasuries are also rallying in response.
With traders growing suspicious of going long on stocks near 52-week highs, it might be time to look at some longer-term growth stocks that offer more attractive entry points for the buy-and-hold investor. Here are three that are being considered by that set.
The Trade Desk (TTD)
The Trade Desk runs a digital advertising platform that has witnessed steady growth for the last decade. Over the past nine years, TTD stock has risen nearly 1,600% despite crashing 60% year to date. That extended pullback has pushed shares of The Trade Desk from a 52-week high north of $141 to recent lows near $43.
The culprit is slowing growth and a number of headwinds related to competition from other advertising platforms like Amazon (AMZN).
Earlier this month, Morgan Stanley cut its price target from $80 to $50, writing, "Fundamental uncertainties, tough compares into ’26, and open web headwinds lead us to see limited upside and a more balanced risk reward from here."
Still, analyst guidance suggests The Trade Desk will grow profits and revenue by high-teens percentage points in fiscal 2026 and 2027, and the stock's current price-to-earnings ratio near 25 means it is at a much more attractive entry point for longer-term holders.
TTD weekly stock chart
The weekly chart on TTD tells that while it trends near April lows, there's a more sound support foundation near $40. That level held up on at least five occasions throughout 2022. With a Relative Strength Index (RSI) rating of 34, value traders will probably wait for one more dose of capitulation before jumping into the name.
Accenture (ACN)
Accenture began mass layoffs earlier this year as part of a cost-cutting regime brought on by a weakening consulting environment. Besides losing plenty of long-term federal contracts via the Trump administration's Department of Government Efficiency (DOGE), executives were unimpressed with their AI consulting business.
While overall bookings are expected to fall nearly 6% YoY in the fiscal fourth quarter, which will be released in the premarket this Thursday, AI bookings rose $100 million on a quarterly basis in Q3 and are at least showing some growth, though nothing compared to what analysts previously expected.
Analysts still expect Accenture to post mid-to-high single-digit growth on EPS and revenue over the next two years, and the stock's current forward P/E near 18 makes it look cheap by historical standards.
Now trading down 33% year to date and at its lowest level in five years, the game plan for Accenture is to allow one more full downswing to play out before entering. After falling through the past year's support at $280, as well as the 2022/23 support near $242, the $213 level from half a decade ago beckons. This price level served as resistance in early 2020 before Covid erupted and then as support in 2021 before ACN launched an incredible bull rally. The weekly RSI at 31 should allow for the last wave of capitulation, although it might take a while.
ACN weekly stock chart
Adobe (ADBE)
Last but not least, Adobe stock is down over 31% in the past year and nearly 50% off its 2021 highs near $700. The stock made a run for the top in early 2024 but fell short. It has drifted lower ever since.
The long series of lower highs and lower lows over the past 18 months makes it appear obvious that ADBE will retest the $275 low from September 2022 before developing any sort of uptrend.
In recent earnings calls, Wall Street was impressed that Adobe hit its goal early for producing $250 million in annual AI-related recurring revenue. But AI is measured in billions, and stock market bulls had many other, more appealing names to chase in that space in recent years.
Adobe trades at not much more than 17 times non-GAAP forward earnings, and the company has a five-year average of trading at 32 times that figure. While sitting on a neutral rating, Citi attaches a $400 price target to Adobe. The bottom shouldn't be too far now.
ADBE weekly stock chart
- Powell scares market with talk of high equity valuations.
- Adobe stock offers a nice entry at $275 if shares continue their decline.
- After a 60% YTD decline, The Trade Desk is a good bet at $40.
- Bulls should hit the buy button on Accenture at $213.
US stocks faltered on Tuesday after Federal Reserve (Fed) Chair Jerome Powell said the equity market was "fairly highly valued". In a speech at the Greater Providence Chamber of Commerce, Powell stated that rising inflation and a weakening labor market have led to a situation in which there is "no risk-free path."
Markets sold off on that news, sending the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) from gains to -0.3% and -0.6% performances. The NASDAQ (IXIC), already trending a bit glum, sank to a -1.0% pullback.
Much of that pessimism, however, surrounds the high-flying growth stocks that have risen swiftly since the April lows. Many value stocks have gained ground, such as UnitedHealth Group (UNH), since they are viewed as safe havens in a storm. Gold and US Treasuries are also rallying in response.
With traders growing suspicious of going long on stocks near 52-week highs, it might be time to look at some longer-term growth stocks that offer more attractive entry points for the buy-and-hold investor. Here are three that are being considered by that set.
The Trade Desk (TTD)
The Trade Desk runs a digital advertising platform that has witnessed steady growth for the last decade. Over the past nine years, TTD stock has risen nearly 1,600% despite crashing 60% year to date. That extended pullback has pushed shares of The Trade Desk from a 52-week high north of $141 to recent lows near $43.
The culprit is slowing growth and a number of headwinds related to competition from other advertising platforms like Amazon (AMZN).
Earlier this month, Morgan Stanley cut its price target from $80 to $50, writing, "Fundamental uncertainties, tough compares into ’26, and open web headwinds lead us to see limited upside and a more balanced risk reward from here."
Still, analyst guidance suggests The Trade Desk will grow profits and revenue by high-teens percentage points in fiscal 2026 and 2027, and the stock's current price-to-earnings ratio near 25 means it is at a much more attractive entry point for longer-term holders.
TTD weekly stock chart
The weekly chart on TTD tells that while it trends near April lows, there's a more sound support foundation near $40. That level held up on at least five occasions throughout 2022. With a Relative Strength Index (RSI) rating of 34, value traders will probably wait for one more dose of capitulation before jumping into the name.
Accenture (ACN)
Accenture began mass layoffs earlier this year as part of a cost-cutting regime brought on by a weakening consulting environment. Besides losing plenty of long-term federal contracts via the Trump administration's Department of Government Efficiency (DOGE), executives were unimpressed with their AI consulting business.
While overall bookings are expected to fall nearly 6% YoY in the fiscal fourth quarter, which will be released in the premarket this Thursday, AI bookings rose $100 million on a quarterly basis in Q3 and are at least showing some growth, though nothing compared to what analysts previously expected.
Analysts still expect Accenture to post mid-to-high single-digit growth on EPS and revenue over the next two years, and the stock's current forward P/E near 18 makes it look cheap by historical standards.
Now trading down 33% year to date and at its lowest level in five years, the game plan for Accenture is to allow one more full downswing to play out before entering. After falling through the past year's support at $280, as well as the 2022/23 support near $242, the $213 level from half a decade ago beckons. This price level served as resistance in early 2020 before Covid erupted and then as support in 2021 before ACN launched an incredible bull rally. The weekly RSI at 31 should allow for the last wave of capitulation, although it might take a while.
ACN weekly stock chart
Adobe (ADBE)
Last but not least, Adobe stock is down over 31% in the past year and nearly 50% off its 2021 highs near $700. The stock made a run for the top in early 2024 but fell short. It has drifted lower ever since.
The long series of lower highs and lower lows over the past 18 months makes it appear obvious that ADBE will retest the $275 low from September 2022 before developing any sort of uptrend.
In recent earnings calls, Wall Street was impressed that Adobe hit its goal early for producing $250 million in annual AI-related recurring revenue. But AI is measured in billions, and stock market bulls had many other, more appealing names to chase in that space in recent years.
Adobe trades at not much more than 17 times non-GAAP forward earnings, and the company has a five-year average of trading at 32 times that figure. While sitting on a neutral rating, Citi attaches a $400 price target to Adobe. The bottom shouldn't be too far now.
ADBE weekly stock chart
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