The U.S. economy is girding for a recovery from COVID-19 lows on the back of an ongoing mass vaccination program, a recent federal recovery package and a low interest rate environment. And stocks that have fared well over the past year thanks to the pandemic are now experiencing a correction as investors rotate to turnaround outdoor stocks.
This action is being driven primarily by a rotation away from pricey tech stocks to undervalued non-tech stocks. This is evident from the tech-heavy Nasdaq Composite’s 4.2% decline over the past month compared to 0.9% and 4.8% gains of S&P 500 and Dow Jones Industrial Average, respectively.
However, as pandemic-driven trends are expected to continue given certain benefits therein, the current price dip in some Nasdaq stocks could be a solid buying opportunity for investors. Continued innovations by these companies and an increasing demand for their offerings should help these stocks deliver significant returns in the long run.
Adobe, Inc. (ADBE), Workday, Inc. (WDAY), Autodesk, Inc. (ADSK), and Telefon AB L.M. Ericsson ADR (ERIC) are four stocks that have lost some value lately and now offer investors attractive entry points.
Adobe, Inc. (ADBE)
Adobe is involved in developing t and marketing a range of software products, including Photoshop, Lightroom, and Acrobat. The company has global operations. ADBE has gained 33.4% over the past year to close yesterday’s trading session at $447.59. However, the stock is down 10.3% over the past month.
ADBE has acquired Workfront, which is a market leading platform in work management. ADBE has also entered a partnership with Microsoft and c3.ai to develop CRM tools using artificial intelligence (AI).
For the quarter ended November 27, 2020, ADBE reported a 14% year-over-year rise in revenue. The company also reported a 20% gain in its Digital Media segment revenue during that period.
ADBE is expected to see revenue growth of 21.6% for the quarter ended February 28, and 18.2% in 2021. Its EPS is estimated to grow 11.5% in 2021 and at a rate of 16.7% per annum over the next five years.
ADBE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
ADBE has an A grade for Quality and B for both Sentiment and Stability. In the Software - Application industry, it is ranked #21 of 114 stocks.
In total, we rate ADBE on eight different levels. Beyond what we’ve stated above we have also given ADBE grades for Momentum, Value, and Growth. Get all the ADBE ratings here.
Workday, Inc. (WDAY)
WDAY is involved in developing and marketing cloud-based applications for finance and human resource management. The company has worldwide operations. MSFT has returned 85% over the past year but declined 9.4% over the past month to close Monday’s trading session at $254.88.
WDAY recently completed the acquisition of Peakon, which is a leading employee success platform. The company has also launched a COVID-19 management platform to help organizations protect their workforces.
For the quarter ended January 2021, the company’s revenue rose 15.9% versus the same period last year. Its subscription revenue grew 19.8% during the period.
WDAY’s revenue is estimated to increase 15.8% for the quarter ended April 30 and 15.6% in 2022. Its EPS is expected to rise 65.9% for the quarter ended April 30, 2021 and 15.3% per annum over the next five years.
It’s no surprise that WDAY has an overall B rating, which equates to Buy in our POWR Ratings system. WDAY has an A grade for Growth and B for Sentiment. In the Software - Application industry, it is ranked #25 of 114 stocks.
Click here to see the additional POWR Ratings for WDAY (Stability, Value, Momentum, and Quality).
Autodesk, Inc. (ADSK)
ADSK operates as a design software company and provides related services. The company caters primarily to enterprise clients in the architecture, digital media, and construction sectors. ADSK’s stock has returned 72.8% over the past year and its last closing price was $273.02. The stock has lost 10.5% over the past month.
ADSK recently entered an agreement to acquire Innovyze, which is a leading water infrastructure software company, for $1 billion. The company has also launched Autodesk Takeoff to expand its Autodesk Construction Cloud portfolio.
For the quarter ended December 31, 2020, the company’s revenue rose 16% compared to the same period last year. Its operating margin gained three percentage points during that period.
ADSK is expected to see revenue growth of 10.5% for the quarter ended April 30th, 2021 and 13.7% in 2022. Its EPS is estimated to grow 22.5% in 2022 and 31% per annum over the next five years.
ADSK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary ratings system. ADSK has an A grade for Quality. In the Software - Business industry, it is ranked #11 of 61 stocks.
Beyond what we’ve stated above, we also have given ADSK’s grades for Growth, Value, Sentiment, Momentum, and Stability. Get all the ADSK ratings here.
Telefon AB L.M. Ericsson ADR (ERIC)
ERIC is involved in providing telecommunications products and services. The company has international operations. ERIC’s stock has gained 96.5% over the past year to close the last trading session at $13.68. The stock is currently trading 10.7% below its 52-week high of $15.32.
ERIC has partnered with Telenet to deploy 5G telecommunications across Belgium and has partnered with Deutsche Telekom to provide renewable energy for mobile sites.
For the quarter ended December 31, 2020, ERIC’s sales grew 13% year-over-year. The company’s network sales grew 20% during the same period.
ERIC is expected to see a revenue growth of 26.6% for the quarter ended March 31, 2021 and 14.4% in 2021. Its EPS is estimated to grow 15.9% in 2021 and 13.6% per annum over the next five years.
It’s no surprise that ERIC has an overall A rating, which equates to Strong Buy in our POWR Ratings system. ERIC has an A grade for Sentiment and B for Growth and Value. In the Telecom - Foreign industry, it is ranked #1 of 52 stocks.
Click here to see the additional POWR Ratings for ERIC.
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ADBE shares were trading at $454.46 per share on Tuesday afternoon, up $6.87 (+1.53%). Year-to-date, ADBE has declined -9.13%, versus a 6.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks.4 Buy the Dip Nasdaq Stocks appeared first on StockNews.com