Investors know there's more to Adobe than the Acrobat Reader

Still, assuming a U.S. economic recovery by Q4, Adobe remains well-positioned to deliver the applications needed for rich internet applications, web sites, web-based graphics, video creation, and document processing. Further, pent-up demand is building for CS4 -- and this is something institutional investors have sensed -- having taken Adobe's shares to $29 from about $16 in three months, despite no incontrovertible signs of a bottom to the U.S. recession.

Other positives: Adobe has demonstrated that selling appropriately-priced, multiple products together can increase market share and establish a company position in new product categories with current customers. The First Call FY2009/FY2010 EPS estimates for ADBE are $1.49 to $1.65.

The risks are obvious enough: a failure of advertising spending to rev-up in Q3/Q4 would send Adobe's shares tumbling. The emergence of lower-cost PDF creation software also represents a longer-term concern, about not enough to tip the scale from a Buy.

Stock Analysis: Adobe Systems is a moderate-risk stock. Consider buying a 25% position in ADBE now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your ADBE position in the first half of 2009. Sell/Stop Loss if you were to buy shares in this company: $13.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.