Core Insights - Adobe (ADBE) stock is highlighted for its monopoly-like high margins available at a discounted price, making it an attractive investment opportunity [2] - The company benefits from strong pricing power and high margins, leading to consistent and predictable profits and cash flows, which reduces risk and supports capital reinvestment [3] Financial Performance - Adobe experienced a revenue growth of 10.7% over the last twelve months (LTM) and an average growth of 10.5% over the past three years [7] - The company reported an operating cash flow margin of approximately 42.2% and an operating margin of 36.2% for LTM, with long-term averages of about 39.0% and 35.4% respectively [7] - ADBE stock is currently offered at a price-to-sales (P/S) multiple of 6.3, representing a 38% discount compared to the previous year [7] Market Context - Adobe's diversified software solutions cater to various sectors, including Digital Media, Digital Experience, and Publishing & Advertising, enhancing its market position [3] - The stock selection criterion includes companies with a market cap over $10 billion, focusing on those with high cash flow margins and significant valuation decreases over the past year [6]

Core Viewpoint - Merck (MRK) stock is highlighted for its monopoly-like high margins available at a discounted price, making it an attractive investment opportunity [1] Financial Performance - Revenue growth for Merck is reported at 1.8% for the last twelve months (LTM) and an average of 3.7% over the last three years [8] - Recent profitability metrics include approximately 29.1% operating cash flow margin and 31.2% operating margin for LTM [8] - Long-term profitability averages show about 27.2% operating cash flow margin and 22.6% operating margin over the last three years [8] - The stock is currently offered at a price-to-sales (P/S) multiple of 3.5, representing a 22% discount compared to one year ago [8] Investment Strategy - The Trefis High Quality Portfolio, which includes Merck, has a record of outperforming benchmark indices, including the S&P 500, S&P mid-cap, and Russell 2000 [11] - The selection process for stocks focuses on those with market capitalizations over $10 billion, high cash flow from operations margins, and those that have significantly decreased in value over the past year [6] Market Dynamics - The average 12-month forward returns for selected stocks are close to 19%, with a win rate of around 72% for positive returns [9]

Core Insights - Eli Lilly (LLY) stock is highlighted for its monopoly-like high margins and reduced pricing, making it an attractive investment opportunity [2] - The company has demonstrated strong revenue growth and profitability, with a focus on innovative pharmaceuticals for various conditions [3][6] Financial Performance - Revenue growth for Eli Lilly was 36.8% over the last twelve months (LTM) and averaged 23.4% over the past three years [6] - Recent profitability metrics include an operating cash flow margin of approximately 20.5% and an operating margin of 43.0% LTM [6] - Long-term profitability averages show an operating cash flow margin of roughly 17.8% and an operating margin of 35.6% over the last three years [6] Valuation - Eli Lilly stock is currently available at a price-to-sales (P/S) multiple of 14.3, representing a 30% discount compared to one year ago [6] Market Trends - The stock selection strategy focuses on companies with a market cap greater than $10 billion, eliminating those with low cash flow from operations and operating margins, while also considering stocks that have significantly decreased in valuation over the past year [5] - The average 12-month forward returns for selected stocks are nearly 19%, with a win rate of around 72% for positive returns [7]