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4 Buy the Dip Nasdaq Stocks

The stocks of many pandemic winners are now experiencing a correction as investors rotate into potential post-pandemic winners. With that backdrop, we believe the tech-heavy Nasdaq Composite’s 4.2% decline over the past month offers good entry points to Adobe (ADBE), Workday (WDAY), Autodesk (ADSK), and Ericsson (ERIC). These names are well-positioned to benefit in the long run because pandemic-driven trends are expected to continue in the post-pandemic world. Let’s discuss.

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.

Click here to check out our Software Industry Report for 2021

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.

Click here to checkout our 5G Industry Report for 2021

Want More Great Investing Ideas?

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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.

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