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Nasdaq Dwarfs Wall Street Peers in 1H20: 5 Picks

Tirthankar Chakraborty

The tech-laden Nasdaq lost around 24% on Mar 23, slipping from its mid-February peak after the coronavirus outbreak dealt a huge blow to the financial markets and the economy. But since then, the index has got its mojo back as investors are upbeat about tech riding out the economic upheaval arising from shutdowns and social-distancing measures implemented to curb the spread of the virus. 

 

From its Mar 23 low, the Nasdaq has soared almost 43%, while the Dow, the S&P 500 and the Russell 2000 index gained 37%, 36% and 41%, respectively. The Nasdaq is up 10% year to date, while its peers like the Dow, the S&P 500 and the Russell 2000 index are down 10.8%, 6% and 15%, respectively. 

 

Per Dow Jones Market Data, the last time Nasdaq moved up in the middle of the year while the Dow and the S&P 500 went down was in the year 1977. What’s more, particularly against the Dow, the Nasdaq is relishing its best outperformance since 1983, when it had a 20.3-percentage-point lead over the blue-chip index.

 

During the course of this year’s remarkable journey, the Nasdaq hit the psychological milestone of 10,000 on Jun 10 in less than 50 years. And in the process, the index completed the V-bottom, which represents a sharp fall and then a quick recovery, resembling a V on the chart.

 

And the largest tech names in terms of market capitalization have significantly contributed to Nasdaq’s rebound. Notable among them are Apple, Facebook, Amazon and Google-parent Alphabet.

 

Apple’s shares are currently near a 52-week high, with the trend likely to continue. The company’s service revenues reached an all-time high of $13.3 billion during the second quarter. And with digital content stores and streaming services gaining traction amid the pandemic, the services segment is expected to deliver encouraging numbers in the near future. Apple’s wearable, home and accessories segments performed well in the first half of this year, with the segment registering a turnover of $16.3 billion. Growth in the segment is likely to continue on increased demand for Apple TV and Apple Watch.

 

Facebook, in the meanwhile, saw higher mobile ad revenues and growing adoption of Stories by advertisers across Instagram. Over the past 12 months, the company has been able to generate free cash flow of almost $23 billion, which should help in inorganic growth and create value for shareholders.

 

Amazon, in the meantime, made the most of its Prime program, while Alphabet’s strengthening cloud unit continues to drive revenues. Notably, majority of people are now working or learning from home with the lockdowns in place, which compelled companies to move a bulk portion of their workload to the cloud.

 

By the way, the work-and-study-from-home trend has been a boon for software vendors which provide remote working facilities like upgrading computers, peripherals and communications equipment.

 

Prominent among such companies are Zoom, Slack, GoToMyPC, Zoho Remotely, Microsoft Office365 and Atlassian. Internet publishers and broadcasters have also seeing a rise in demand.

 

It’s worth pointing out that the Nasdaq’s quick recovery has been fueled by the historic financial aid from the U.S. government and the Fed to combat the negative coronavirus impact on businesses and livelihood.

 

5 Top Nasdaq-Listed Stocks to Buy Now

 

With Nasdaq enjoying a solid spell against its peers, investors might want to consider solid Nasdaq-listed stocks that not only made the most of this memorable upward journey but also have considerable upside left. We have thus listed five such stocks that flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

 

Zoom Video Communications, Inc. ZM provides a video-first communications platform. The Zacks Consensus Estimate for its current-year earnings has moved up 174.4% over the past 60 days. The company’s expected earnings growth rate for the next quarter and current year is 288.9% and 237.1%, respectively. Its shares have gained more than 100% so far this year.

 

Everbridge, Inc. EVBG is a software company which provides communications and enterprise safety applications. The Zacks Consensus Estimate for its current-year earnings has climbed 76.3% over the past 60 days. The company’s expected earnings growth rate for the next quarter is 150%. Its shares have gained 80.5% year to date.

 

Turtle Beach Corporation HEAR is an audio technology company. The Zacks Consensus Estimate for its current-year earnings has risen more than 100% over the past 60 days. The company’s expected earnings growth rate for the next quarter is 27.8%. Its shares have gained 55.5% so far this year.

 

Domo, Inc. DOMO designs and develops enterprise software. The Zacks Consensus Estimate for its current-year earnings has advanced 16.9% over the past 60 days. The company’s expected earnings growth rate for the next quarter is 45.9%. Its shares have gained 42.3% year to date.

 

Fortinet, Inc. FTNT is a provider of network security appliances and Unified Threat Management (UTM) network security solutions to enterprises, service providers and government entities. The Zacks Consensus Estimate for its current-year earnings has moved 8.1% north over the past 60 days. The company’s expected earnings growth rate for the current year is 13.8%. Its shares have gained 26% so far this year.

 

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Fortinet, Inc. (FTNT) : Free Stock Analysis Report
 
Turtle Beach Corporation (HEAR) : Free Stock Analysis Report
 
Everbridge, Inc. (EVBG) : Free Stock Analysis Report
 
Domo, Inc. (DOMO) : Free Stock Analysis Report
 
Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
 
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