The Nasdaq Composite ($NASX) is a heavyweight in the world of stock indexes, tracking the performance of over 3,000 companies spanning various sectors, with a heavy dose of technology, biotech, and communications, in particular. But, like any high roller, it has its ups and downs.
In September 2023, the Nasdaq experienced its worst month of the year, dropping by 5.8%. It was the punctuation mark to a generally dismal third quarter, with the Nasdaq swallowing a 4.1% overall decline.
What caused this turbulence? Well, there's a laundry list of culprits: rising bond yields, worries about inflation and interest rates, regulatory hurdles, geopolitical tensions, and some disappointing earnings reports. The rising anxiety among investors has punished growth-driven stocks particularly hard - and even tech giants like Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), and Tesla (TSLA) all ended the month of September between 3% and 8% lower.
But it's not all bad news. The pullback can be an opportunity for value-minded investors to hunt for promising stocks to buy on the dip - plus, it can help to separate the relative strength standouts from the pack.
With this in mind, here we've got three top Nasdaq picks to consider adding to your portfolio. Analysts are singing their praises, and they have room to climb toward their price targets, with strong growth expected in the quarters ahead. Now, let's dive into why these picks are worth your attention.
CrowdStrike: The Cloud Cybersecurity Leader
CrowdStrike (CRWD), the cybersecurity superhero, shields organizations from nasty cyberattacks like ransomware, phishing, and data breaches. CRWD has a market cap of $39.46 billion - and based on its recent price action, the stock certainly qualifies as a relative strength leader.
In fact, CRWD set a new 52-week high of $176.32 earlier today, extending its year-to-date gain to an impressive 67%.
So, why should you bet on CrowdStrike? Well, first off, they're kings in the cloud cybersecurity realm, a market set to balloon with a 8.9% annual growth rate, reaching a whopping $226.2 billion by 2027. CrowdStrike's secret sauce? A cloud-native setup that's super scalable, speedy, and efficient compared to old-school on-premise solutions. Plus, they wield a massive data treasure and fancy AI to keep their customers safe.
Second, CrowdStrike isn't just sitting pretty. They've been expanding their product lineup and reaching into new markets. They recently unveiled Falcon for IT, which takes the same cybersecurity magic and applies it to everyday IT tasks like keeping tabs on assets and CPU usage. They're also gearing up for the next big thing - the Falcon platform's "Raptor" release. This is set to revolutionize how we tackle security breaches with super-fast data collection and AI muscle.
Analysts have stars in their eyes when they look at CrowdStrike. They're predicting earnings of $0.09 per share for the current quarter, a jaw-dropping 145% boost from last year's quarter. And for the next fiscal year, they're eyeing $0.62 per share, which would be a 93.75% growth spurt from this year.
On top of that, the average target price for CrowdStrike's stock is $191.95, hinting at a 16.1% potential gain from the current price. The analysts are in harmony, with 33 out of 39 giving it a "strong buy" recommendation.
So, if you're on the hunt for a top-tier Nasdaq stock to spice up your portfolio this October, CrowdStrike might just be the perfect pick, especially with its current discount.
T-Mobile: The Quiet 5G Giant
T-Mobile (TMUS), the third-largest U.S. wireless carrier by market share, boasts a subscriber base of over 104 million as of Q2 2023. They're outpacing the competition in customer growth, network performance, and innovation. Plus, they're leading the 5G race, covering over 300 million people with their nationwide 5G and 165 million with ultra-fast 5G.
Now, what about the shares? TMUS is roughly flat on a year-to-date basis, but the stock is comfortably outperforming its wireless rivals - Verizon (VZ) and AT&T (T) are both down about 16% in 2023.
More recently, TMUS has started to best the broader market. Over the past month, the stock has gained 3.9%, boosted in part by news of its first-ever dividend payment.
Plus, T-Mobile consistently beats Wall Street's financial forecasts. In Q2 2023 alone, they raked in $19.2 billion in revenue, a 13% boost from the previous year, and $1.86 per share in adjusted earnings, a 17% jump. The company also raised its full-year guidance for 2023. After adding 1.3 million customers in Q2, T-Mobile expects to add between 5 million and 5.5 million postpaid customers this year.
Also, T-Mobile is rolling out new products and services that tap into their 5G prowess and expand their reach. Take Go5G Next, for example, the only plan that guarantees you're always upgrade-ready. And there's T-Mobile Secure Access Service Edge (SASE), targeted toward securely connecting employees, systems, and endpoints to networks, corporate apps, and resources.
Analysts are optimistic on TMUS. They're looking at an average earnings estimate of $1.88 per share for the current quarter, a massive 370% increase from the same quarter last year. For the next fiscal year, they're predicting $9.64 per share, marking a 33% growth rate.
Of the 17 analysts covering the stock, 13 shout "strong buy," three say "moderate buy," and one suggests a "hold." And when it comes to target prices, the mean is $179.88, hinting at a 29% upside potential.
The Trade Desk: The Programmatic Advertising Pioneer
The Trade Desk (TTD), a big name in programmatic advertising, helps advertisers reach their audiences across digital platforms. They've got over 1,000 customers globally, including major brands and agencies.
Now, about their stock – TTD is a major standout, as evidenced by its 84% YTD gain. But after pulling back with the broader market, Trade Desk shares are now off about 10% from their late July high. This dip could be enticing for investors who believe in The Trade Desk's long-term potential.
Now, why should you be optimistic? Along with TTD's strong second-quarter results, they've been rolling out new products and services, capitalizing on their tech and data prowess.
For instance, they're on a mission to cut the cost of digital ads by offering lower prices than supply-side platforms charge for selling ads. This strategy could help them gain more market share and boost margins. They're also introducing a new product called Kokai, designed to make advertising's value more transparent and data-driven.
Analysts are pretty optimistic. They're predicting earnings of $0.13 per share for the current quarter, a whopping 333% increase from the same quarter last year. Looking ahead to the next fiscal year, they're eyeing $0.84 per share, a solid 75% growth rate from the current fiscal year.
Among 24 analysts covering the stock, 16 say "strong buy," three say "moderate buy," four recommend a "hold," and one suggests a "strong sell." The mean target price for The Trade Desk's stock is $89.09, suggesting 8% upside from the current price.
