stocks, bonds, ETFs, straight out of downtown Chicago. This is Zach's Market Edge. Welcome to Zach's Market Edge, the podcast about investing in your life. I'm your host, Tracy Rinek.
And this week I'm going solo to talk about the software stocks. I've been getting a lot of messages from many of you asking, what should you be doing with Adobe, with Twilio, with Salesforce? They've really been lagging, especially this year in 2026. Are they deals, or is this a trap of some sort?
So I thought I would tune into those three and we'll check them out in bigger detail and see what is going on behind the scenes. Maybe there's nothing we can do until we get to the actual earnings in on some of these. But I did see the Salesforce CEO at Davos this week. And he mentioned that there's a lot of buzz around companies that have the LLMs on the AI side, and not as much on everybody else who's making products with AI and integrating it.
So he seemed pretty annoyed that a stock was struggling. And we're going to check it out and see, again, if any of these are some kind of deal, or if they look like their traps. And remember, traps can mean the earnings are on the decline. So just that the stock is falling isn't enough.
It is sucking you in as those earnings decline. But what if the earnings aren't declining? Then you might have some kind of deal there. So let's dive in right away on some of the charts.
But before I do, I did want to mention these flowers behind me if you're watching the video, because they're blooming again. My amaryllis blooms here that I get every holiday moving over again. You can see they're in their second bloom here. So I'm very excited because some years I get the second bloom, some years I don't.
So yay, we're getting the second bloom. Maybe that's a good look here in 2026. OK, now we can look at the charts. And I'm going to start with the year to date.
So Twilio is the mean stock on this chart that I drew it with. That's the blue line. And then you can see the green is Adobe. The orange is Salesforce.
And then I threw in the VOO just to give some context about what the S&P 500 is doing. Now, it's a little hard to do year to date, because we are still not in a full month yet. But you can see why everybody's been asking me, like, are there some deals here? Because Adobe's down 12.
Salesforce is down about 12.1. Well, they're both around the same around 12.1. Twilio is down 13.6. And this is not long into the new year.
VOO is down only about almost 1%. So you can see the difference this year. People just giving up on the software stocks, these big caps softwares. But if we look out a little bit further, I want to take a look at the one month.
And you can see on the one month, it doesn't get any better. We have Salesforce down 14.6, Twilio down 15.9, Adobe down 17.8. That's one month. VOO down about 1% at 0.9%.
Struggling for a while going out six months. Let's see what we get there on the six month chart. Six month, not quite as bad. But because 2026 is pulling it down, they're all still in the negative.
Twilio down 8.5, Salesforce 15.3, and Adobe 19.8. And so this recent sell-off is recent. But the struggle has been around for a while. One year chart, Twilio is the best performer.
It's actually up 4.9 in the last year. But that's just 4.9%, VOO up 12.4, CRM, Salesforce down 31.8, and Adobe down 32.8 during the one year. And then surprisingly, if you look at the five year chart, I know many of you would think like these have probably been doing pretty well over the five years because tech in general, tech in quotes, has been doing well. But that is actually not the case.
They're all three underperforming the S&P 500. Salesforce down 1.4, Adobe down almost 38%, Twilio still down 69% after it was just crushed in the 2022 sell-off. Now, if you look at Twilio here, they're at the bottom. They're this blue chart.
And you can see, they did have the sell-off. Also started in somewhat in 2021, down, down, down. And then it went sideways for several years. It did catch a bid in 2024 and it's moved out of that range.
But that sell-off was so massive from 21 into 22 that we're not even close to those highs and the shares still remain down 69%. So timing is everything on a lot of these stocks. And I know that's why many of you are asking me about them now because you're thinking maybe the time is to get in right now because of how much they have pulled back. And so we are getting in at a better place.
So let's start with Twilio. I brought up a Zax.com. But we could see the Zax ranked number four, which is the sell. I'm not that worried about that because we're heading into earnings season.
And the Zax break can get pretty wonky during earnings season. And we are expecting earnings in mid-February. Just scrolling down to look at what's happening with the earnings. This is a chart I normally like.
I've looked at Twilio often for the value investor portfolio because of these earnings. I mean, they were big in 24. They're still earnings growth in 25, 26, and 27 expected. So with the stock off of its lows, but still lagging, you would think it'd be pretty cheap here.
And it's not that expensive at 21.9 on the forward PE. And a peg of 1.1, which is really low for the peg. So we can see the earnings growth here. 20, 25, we are expecting the 31% for last year.
But it does drop down a bit here in 20, 26, to 12.9. There's just a lot of uncertainty with these types of platforms, whether or not AI will somehow replace what it is that Twilio provides. And that companies will be able to make their own AI platforms and basically be able to bypass what the software companies are offering. But there's no real evidence of this happening yet.
So we're waiting to see how things all shake out. And in the meantime, investors are starting to get nervous. Let's take a look at those detailed earnings estimates and just see whether or not we have some kind of trappy situation, but we really don't because we're seeing earnings growth for next year. And even on the revisions, there is one lower in the last 30 days for 20, 26.
It's nothing extreme. We're looking for 543. It was at 544. That's even up from 90 days ago.
It was at 511. So nothing is screaming like it's a trap right here, as long as these numbers hold, though. And for this year, 481 that has no changes, that's up from 367. So this is all great numbers.
That's why the dilemma and why people are wondering, hey, with it pulling back 13 or 14% here in 2026, maybe I should be keeping it on my watch list or diving in. And Twilio looks like a pretty good opportunity here, not as weak over the last year as some of the others. And it is a pretty volatile stock. But if you are thinking of dollar cost averaging into it, I kind of like that idea here as we wait for earnings.
But everything right now, just in the numbers and the analysts behavior, is telling us that it looks pretty decent. So I'm finding Twilio might be a deal here. That's Twilio TWLO is their ticker. So keep that one on your watch list.
Okay, then we wanted to look at Salesforce ticker CRM. And I know that a lot of people have a love and hate relationship with Salesforce over the years right now. It is in more of the hate column, but stock hasn't completely broken down out of its two year channel yet, but it looks kind of close. So we're waiting on earnings.
We're going to get on late February. So we're waiting there. It is the X number three rank. But look at that price consensus and surprise chart up into the right like Twilio.
Sorry. This winter is getting a lot of us. Okay, but let's look at the sales and EPS growth rates. 2025, we've already had it was up 24%.
2026 up 15.3, 2027 up 10.5, with a P of 19.3, a peg of 1.28. That's all pretty cheap. Okay, so let's take a look at those detailed estimates because then we're going to see whether or not this is a trap or maybe there's some value here. So it's just scrolling down and really we're seeing for this fiscal year, 2026, in the last 60 days, 18 estimates are up, one is up in 30 days.
And then for fiscal 2027, 14 are up, two are up in the last 30 days. And one only one is down in the last 60 for next fiscal year. That's pretty bullish. These analysts weren't seeing any reason really to cut here.
We're seeing double digit earnings growth for 2026, a 15.3%, and 10.5 for 2027. So I'm not seeing any kind of trap here either. But the street is just selling it. Could be a buying opportunity here.
We're going to have to wait a while to get those earnings. Benioff is trying to do the best he can at Davos to, you know, reassure. But it's not working. This could be a buying opportunity on Salesforce ticker CRM.
Okay, our third company, Adobe. I get a lot of questions about Adobe ticker ADB, ADBE. And this has been a fan favorite for many years. So it is interesting to see it near these five year lows here.
And a lot of worries about AI with it. But again, look at those price against census lines. It's kind of hard to believe that it continues to sell off with those lines like that. So 2025 earnings up 13.7, 2026, 11.9, 2027 expects 13.3.
It's cheap, 12.6 on the forward PE, peg ratio, 0.94 that indicates value and growth. So Adobe, if it continues to execute, as it is supposed to, it looks very cheap and like a deal here more than even the other two. But let's take a look at those detailed estimates. It is a number three hold.
So we haven't mixed for this year one estimate higher in the last 30 days. One is lower, but five are up in the last 60, nine are down in the last 60. Next year, next fiscal year, six are up in the last 60, two are down. But one is also up in the last 30.
So someone's getting a little more bullish. And we can see not a lot of change in the earnings estimates for either year, just a few pennies that's bullish. So the analysts are not panicking. Why is everyone else?
Sometimes you do have to go beyond what the street is saying and doing. And you do have to find out more about what's going on with the business and trust in what the business itself is saying. But this is how some good value stocks appear on the horizon because you do get irrational selling occasionally and the street just getting spooked. And we're seeing that with a lot of the software stocks right now.
So we will see when they report, they're not recording again until March. So there's a lot of time period in there for them to get spooked out. So keep that in mind with any of these, they can still go lower, especially the ones like Adobe who's now hitting these five year levels and whatnot and bringing back up the price consensus and surprise chart. It's hitting some very vital levels there under $300 a share.
It's finally dipped back under the last time was in 2022. So I'm keeping all three of these on my watch list as a value investor. And looking for these deals here, because they are pretty hated right now on the street. But the actual fundamentals aren't really showing that.
So I'm going to keep on my watch list. Like I said, I'm going to take a deeper dive. I'm going to listen in on some of these conference calls. But if you're looking around for some deals right now, keep the software stocks.
And there's many more than just these three. But I chose some of the big guys. Keep the software stocks on your list because they've been pretty beaten up and they're selling off again here in 2026. It is presenting an opportunity.
So let me recap the stock tickers again. We had Twilio, TWLO, the ticker, Salesforce, CRM, and Adobe AD is in David, B is a boy E as an Edward AD BE. And as always, I aim to keep you up to date on everything that's hot or not or steals and deals out there. And I'm doing it every week.
So be sure to join us. Get us on Apple, get us here on YouTube, watch the video. We are on sex.com slash YouTube, get us on SoundCloud or anywhere you can get the podcast. But be sure to join in and I'll see you again next week with some more stocks.
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