2 Stocks Down 27% and 8% to Buy Right Now

The prospect of several more weeks of winter after Punxsutawney Phil saw his shadow may have your mind fretful about more frosty weather, but that shouldn't distract you from the S&P 500's red-hot performance, which has resulted in the index soaring more than 20%.

But not every stock has fared as well. In fact, two software stocks, Adobe (NASDAQ: ADBE) and PTC (NASDAQ: PTC) have headed in the other direction. During the same time period, Adobe and PTC have fallen about 27% and 8%, respectively. This may be disconcerting for current shareholders, but two Fool.com contributors believe now's a great time to either start positions or to bulk up further regarding these two tech leaders.

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Adobe shattered records in 2024, but it's sitting in the bargain bin

Scott Levine (Adobe): With enthusiasm for artificial intelligence (AI) running rampant, it certainly doesn't feel like there have been a lot of opportunities recently to scoop up leading AI stocks at a discount. Thanks to investors' fears that Adobe's growth prospects are less robust than what they had previously been, shares have plunged over the past year, leaving those on the prowl for inexpensively valued AI stocks with a fortuitous opportunity in Adobe stock.

The stock's decline belies the fact that the company reported a strong 2024 performance -- a singularly strong performance that featured a couple of high-water marks. For one, the company reported record revenue of $21.5 billion in 2024, representing 11% year-over-year growth. Plus, with the contribution of a record $2.92 billion generated in the fourth quarter, Adobe reported record 2024 operating cash flow of $8.06 billion.

While it's valid to wonder whether Adobe's best growth days are behind it, it's important to recognize the company's strong customer engagement that it had enjoyed at the end of last year -- hardly a sign that the company is losing favor among AI-focused customers.

On the company's fourth-quarter 2024 conference call, for example, management singled out customer enthusiasm for Firefly, its generative AI models, noting that "Firefly powered generations across our tools surpassed 16 billion, with every month this past quarter setting a new record."

With Adobe stock trading at 25.6 times operating cash flow and 36.5 times trailing earnings, both discounts to their five-year average cash-flow and P/E multiples of 32.6 and 45.8, respectively, now seems like a great time to pick up Adobe, a leading software-as-a-service stock.

PTC continues on its impressive growth path

Lee Samaha (PTC): Computer-aided design and product lifecycle software company PTC disappointed some investors recently with its first-quarter 2025 earnings report. However, if you look deeper, the company is still on a growth trajectory that many would envy.

The long-term case for the stock revolves around the increasing adoption of digital technology designing and manufacturing products. PTC's software creates a so-called digital thread that gathers, collates, and analyzes valuable digital information to improve design, production, servicing, and disposal of a product.

It's an exciting area, and no one disputes the long-term potential as factories get smarter and look to implement digital technologies.

However, the near-term problem is that PTC's end-market customers are struggling with an industrial slowdown, which also holds back PTC's growth. As such, investors get anxious when a company like PTC cuts its full-year revenue and earnings guidance. They get even more skittish when they know that PTC is restructuring its sales organization to focus on selling by industry vertical.

That said, the underlying and more critical full-year 2025 guidance numbers were left unchanged. Accounting standards related to revenue recognition can make revenue and earnings hard to predict for companies selling on-premise subscriptions.

Instead, it's better to focus on PTC's annual run rate (ARR) metric, defined as the "annualized value of our portfolio of active subscription software, SaaS, hosting, and support contracts as of the end of the reporting period." This metric guides its free-cash-flow (FCF) generation.

The good news is management left both guidance numbers unchanged, and now expects 9% to 10% in ARR in constant currency, and $835 million to $850 million in FCF, implying a 14.5% increase at the midpoint.

Growing ARR and FCF at those rates in a weak environment is a good result. It indicates the underlying strength of the demand for PTC's software, and the stock's sell-off looks like an excellent buying opportunity.

Is now the right time to buy Adobe and PTC?

With shares of leading AI stocks frequently trading at premiums to their historic valuations, today's opportunity with Adobe stock offers a favorable circumstance with the company riding strong momentum out of the fourth quarter of 2024. Investors optimistic about the digital transformation of industries should investigate PTC stock more closely, particularly given its recent decline.

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Lee Samaha has no position in any of the stocks mentioned. Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe. The Motley Fool recommends PTC. The Motley Fool has a disclosure policy.