If you believe in holding shares for the long term, I’d suggest that you take a closer look at Adobe Systems (NASDAQ:ADBE) — the creative and document services company offering an assortment of media software. Well-performing stocks tend to keep on winning, and the strength of Adobe stock might be a good indication that the company’s best days are ahead of it.

As a darling among investors over the past few years, ADBE stock gets a lot of attention among software stocks. Year-to-date, the stock is up about 43% and the Adobe stock price has increased almost 45% over the past 12 months. ADBE has multiple, positive catalysts.

With that in mind, let’s take a closer look at the fundamentals that are supporting the strong performance of Adobe stock.

ADBE’s Subscription Model Has Been a Winner

Adobe’s flagship software products for video, graphic and audio content creation include Photoshop, Illustrator, Acrobat and Dreamveawer. In 2012, when Adobe first announced it switched from a software-sales licensing model to a monthly subscription-based model for Adobe Creative Cloud (CC), Wall Street was not sure as to how this radical approach would affect its share price.

Fast forward to 2018 and investors realize that the significant risk that Adobe has taken has paid off: Users, the company and investors are all happy with this subscription model. CC includes a suite of creativity and design software with a plethora of users, ranging from students, creative individuals, industry professionals to entire companies. Users are always up-to-date with the latest versions of software; Adobe does not have to persuade customers to buy a newer version every few years; investors have also been thrilled with increasing and stable income — about 80% of ADBE’s revenue comes from subscriptions.

In September 2018, when Adobe announced third-quarter financial results, it topped estimates with a corporate record for quarterly revenue of $2.29 billion, up 24% percent from the same period in 2017. As a result, Adobe Systems has become a major player with a $122 billion market cap.

Adobe Stock Will Shine in 2019

Adobe will report earnings on Dec. 13, 2018, after market close. I expect the company to deliver yet another robust quarter. ADBE has a Q4 earnings-per-share target of $1.87 a share on revenue of $2.42 billion. Adobe operates in three market segments: Digital Media, Digital Marketing and Publishing. The Digital Marketing, which includes Creative Cloud, is the most profitable division. Analysts also note that in professional design and creative content creation software, Adobe Systems faces virtually no real competition.

So far, ADBE’s success has mostly come from the U.S. But Wall Street believes the company can easily grow its stronghold in both Asia and Europe, adding to the current $3 billion of revenue per year from these overseas regions.

Adobe has enough cash on hand to finance potential acquisitions to add to its recent $4.75 billion purchase of Marketo and $1.6 billion acquisition of Magento — two acquisitions that are expected to help ADBE grow its market share in Software-as-a-Service (SaaS). Such acquisitions complement Adobe’s powerful cloud partnership with Microsoft’s (NASDAQ:MSFT) Azure. This strong and unique relationship between the two companies since 2016 has also fueled the rumors that Microsoft may purchase Adobe as early as 2019.

The Bottom Line on ADBE Stock

Tech stocks may continue to be volatile in December, and I would not advocate trying to identify stocks that have bottomed; however, I think that Adobe stock is compelling at these levels. Adobe has successfully shown Wall Street that when management takes the right steps to combine products, people, business partners as well as users, a large-scale paradigm shift to becoming a cloud company can create growth as well as shareholder value.

Within two to three years, investors who buy ADBE are likely to be rewarded handsomely. By then, ADBE stock could even become a takeover target.

As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities.