The NASDAQ soared to an all-time high on October 7, getting a boost from tech and mega-cap stocks. In an interview with CNBC on October 26, Nick Colas, Co-Founder at DataTrek Research Nick shared his insights on the current market trends and the potential for the tech-heavy index to continue its upward momentum. Colas discussed the historical data on the index’s performance in the third year of a bull market, highlighting that in six out of ten instances, the index continued to rally, while in four instances, it did not.
Colas noted that the overall churn for the index in the third year of a bull market is 4.4%, which is not impressive, but attributed this to the four losing years of 1984, 1987, 1990, and 2011, which were marked by significant events such as the 1987 crash and the 1990 invasion of Iraq. However, when these numbers are excluded, the average return for the index in the third year of a bull market is 13.3%. Colas expressed his optimism that as long as there are no major catalytic events, the momentum is likely to continue, and the NASDAQ could see at least a 10% return, if not better.
Colas argued that the index’s performance has not been uniform, with other groups and small caps taking leadership occasionally, indicating a healthier market than in the 1990s, when tech stocks dominated. He also pointed out that while the NASDAQ is up 45% over the past 12 months, its three-year returns, including the 2022 bear market, are more modest, suggesting that the index still has room to run.
Colas acknowledged that valuations are high, but emphasized that valuations are notoriously bad at timing the market. He believes despite the high valuations, the NASDAQ’s momentum and the overall market trend could continue to drive the index higher.
The NASDAQ’s recent surge to an all-time high has sparked optimism about its future performance, with some experts predicting continued growth despite high valuations. While there are always uncertainties and potential risks, the current trend suggests that the index may have further room to run. With that in context, let’s take a look at the 10 oversold NASDAQ stocks to invest in now.
Photo by Pascal Bernardon on Unsplash
Our Methodology
To compile our list of the 10 oversold NASDAQ stocks to invest in now, we used the Finviz and Yahoo stock screeners to find the largest NASDAQ stocks that have fallen significantly on a YTD basis and have a forward P/E of less than 15, as of October 23. We then narrowed our choices to 10 stocks according to their hedge fund sentiment, which was taken from our database of 912 elite hedge funds as of Q2 of 2024. The list is sorted in ascending order of their hedge fund sentiment, as of the second quarter.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Oversold NASDAQ Stocks To Invest In Now
10. Concentrix Corporation (NASDAQ:CNXC)
Number of Hedge Fund Investors: 25
Forward P/E Ratio as of October 23: 3.75
YTD Performance as of October 23: -54.02%
Concentrix Corporation (NASDAQ:CNXC) is a global provider of customer experience (CX) solutions, delivering technology and services across industries such as technology, retail, banking, communications, and healthcare. The company’s revenue is generated through billing for service hours or transaction volumes processed for clients, supported by its broad market presence with operations in North America, EMEA, APAC, and LATAM.
Demand for Concentrix Corporation’s (NASDAQ:CNXC) CX solutions remains high, and its offerings in process automation and data analytics distinguish it from competitors. The company’s extensive global reach and diverse customer base create a strong foundation for sustained growth.
Concentrix Corporation’s (NASDAQ:CNXC) investments in technology and generative AI further enhance its position. The company’s AI advancements in knowledge management, customer support, and automation are expected to drive efficiency, supported by the recent patent for its AI platform, GILES, which automates coding and testing processes—highlighting Concentrix’s dedication to innovation.
With a strong financial performance, strategic positioning in the CX industry, and forward-looking investments in technology and AI, Concentrix Corporation (NASDAQ:CNXC) presents a compelling investment opportunity. Analysts are optimistic, with a consensus Buy rating and a target price of $76.83, representing a potential 39.66% upside from its current level.
9. Xerox Holdings Corporation (NASDAQ:XRX)
Number of Hedge Fund Investors: 28
Forward P/E Ratio as of October 23: 5.78
YTD Performance as of October 23: -43.21%
Xerox Holdings Corporation (NASDAQ:XRX) operates as a holding company, with subsidiaries that provide products such as printers, scanners, and related supplies.
Although once a leading name in printing and copying technology, Xerox Holdings Corporation (NASDAQ:XRX) has faced challenges in recent years due to declining demand for physical document solutions. In response, the company is actively pivoting toward IT services and software solutions and is exploring opportunities in emerging areas.
On October 17, Xerox Holdings Corporation (NASDAQ:XRX) announced that it entered into a definitive agreement to acquire ITsavvy, a leading provider of integrated IT products and services, in a deal valued at $400 million. The acquisition is a strategic move by Xerox Holdings Corporation (NASDAQ:XRX) to expand its IT Services capabilities and diversify its revenue streams in the geographies it serves. ITsavvy is a portfolio company of GenNx360 Capital Partners, which has established itself as a leading provider of integrated IT infrastructure solutions, delivering business outcomes through client experiences across multiple segments and industries.
The acquisition of ITsavvy is a key component of Xerox Holdings Corporation’s (NASDAQ:XRX) reinvention and commitment to expand its IT Services business and aims to transform the company into a more agile and innovative organization. By expanding its IT Services capabilities, Xerox Holdings Corporation (NASDAQ:XRX) will be able to offer a broader range of solutions to its clients, helping them to transform the way they work and achieve their business objectives.
Xerox Holdings Corporation (NASDAQ:XRX) is also known for its history of innovation and continues to invest in research and development, securing patents that may prove valuable in the future. The company has outlined a strategic plan to drive revenue and earnings growth, which includes new technology development and a focus on strengthening its operating model.
For the latter half of 2024, Xerox Holdings Corporation (NASDAQ:XRX) anticipates improved revenue growth fueled by equipment orders and product launches, with a focus on expanding its offerings in the A4 and A3 printing categories and exploring new segments in the production market.
8. Avis Budget Group, Inc. (NASDAQ:CAR)
Number of Hedge Fund Investors: 33
Forward P/E Ratio as of October 23: 3.39
YTD Performance as of October 23: -55.07%
Avis Budget Group, Inc. (NASDAQ:CAR) is a leading global provider of car and truck rentals, car sharing, and ancillary products. The company operates well-known brands such as Avis, Budget, and Zipcar. Avis Budget Group, Inc. (NASDAQ:CAR) has approximately 10,250 rental locations in approximately 180 countries around the world including North America, Europe, Australia and Asia.
On August 5, Avis Budget Group, Inc. (NASDAQ:CAR) announced its financial results for the second quarter, reporting a revenue of over $3.05 billion, a 2.4% decline compared to the same quarter in the previous year. Vehicle utilization for the quarter stood at 70.2%, with an improvement of approximately one point in June compared to June 2023. The company’s liquidity position remained solid, with $822 million available at the end of the quarter, complemented by an additional $2.9 billion in fleet funding capacity. The company also benefits from well-structured corporate debt, with no major maturities due until 2027.
Avis Budget Group, Inc. (NASDAQ:CAR) is investing in technology, including analytics on in-life vehicle costs and process enhancements, which are anticipated to lower operating and SG&A expenses and improve the overall cost structure and profitability of the company.
Avis Budget Group, Inc. (NASDAQ:CAR) is also focusing on fleet rightsizing by selling a record number of vehicles which aims to position the company for improved utilization and pricing benefits, which will positively impact future revenue and margins.
7. Sirius XM Holdings Inc. (NASDAQ:SIRI)
Number of Hedge Fund Investors: 33
Forward P/E Ratio as of October 23: 7.86
YTD Performance as of October 23: -50.26%
Sirius XM Holdings Inc. (NASDAQ:SIRI) is an American broadcasting company that provides satellite radio and online audio services. The company is a leader in the audio entertainment industry and has a subscriber base of approximately 33 million.
On October 22, Sirius XM Holdings Inc. (NASDAQ:SIRI) announced a new partnership with ESPN that offers more ways for their US subscribers to access premium content. Starting later this month, select SiriusXM subscribers can receive up to a 6-month subscription to ESPN+, while new and existing ESPN+ subscribers will be eligible for a 6-month subscription to SiriusXM’s streaming-only service.
Through this offer, ESPN+ subscribers will gain access to the company’s extensive library via the SiriusXM app, including hundreds of ad-free music channels, live pro and college sporting events, and over 20 sports-focused channels with expert analysis. Eligible SiriusXM subscribers, beginning with Platinum VIP members and expanding to other tiers, will be able to enjoy ESPN+, the leading sports streaming platform, which features over 32,000 live sports events annually, including exclusive UFC events, NHL games, college sports, soccer, tennis, and ESPN+ Originals like the 30 for 30 film series.
Sirius XM Holdings Inc. (NASDAQ:SIRI) has a strong market share and high average revenue per user (ARPU). The company is transitioning its business and focusing on its strong properties such as SoundCloud and Pandora, as well as ad revenue. The company is a leading ad-supported streaming provider with 150 million listeners. However, Sirius XM Holdings Inc. (NASDAQ:SIRI) faces challenges in competing with Apple and Amazon, which have a reasonable market share and don’t need the same profits from their existing business.
6. QuidelOrtho Corporation (NASDAQ:QDEL)
Number of Hedge Fund Investors: 33
Forward P/E Ratio as of October 23: 12.56
YTD Performance as of October 23: -46.20%
QuidelOrtho Corporation (NASDAQ:QDEL) is a diagnostics healthcare company that focuses on innovative in vitro diagnostic technologies designed for point-of-care settings, clinical labs, and transfusion medicine.
QuidelOrtho Corporation (NASDAQ:QDEL) gained prominence during the COVID-19 pandemic due to its rapid diagnostic testing solutions. However, as demand for pandemic-related tests declined QuidelOrtho Corporation (NASDAQ:QDEL) has faced headwinds, resulting in a steep drop in stock performance.
On August 29, QuidelOrtho Corporation (NASDAQ:QDEL) announced that it received FDA 510(k) clearance for its VITROS syphilis assay, a test that uses emission of light as a result of a chemical reaction to detect and identify syphilis antibodies in human serum or plasma. This new assay is available on the VITROS 3600 Immunodiagnostic System, VITROS 5600, and VITROS XT 7600 Integrated Systems in the US.
This achievement further strengthens QuidelOrtho Corporation’s (NASDAQ:QDEL) position in infectious disease testing. The assay detects total antibodies (IgG and IgM) to Treponema pallidum (TP)-specific antigens, which helps in the diagnosis of syphilis in conjunction with other tests and clinical findings.
This clearance allows the VITROS syphilis assay to be part of the company’s infectious disease portfolio, which is crucial for addressing the rising syphilis epidemic in the US and is expected to provide more timely and accurate diagnoses for effective syphilis treatment and control. There are over 176,000 new cases of syphilis annually and a 36% increase in primary and secondary syphilis since 2021, the assay improves laboratory efficiency, follows CDC’s reverse testing algorithm, and reduces costs by enabling earlier detection.
5. Five9, Inc. (NASDAQ:FIVN)
Number of Hedge Fund Investors: 34
Forward P/E Ratio as of October 23: 12.22
YTD Performance as of October 23: -61.67%
Five9, Inc. (NASDAQ:FIVN) provides cloud contact center software (CCaaS) that enables businesses to enhance customer engagement through its Intelligent CX Platform, which supports communication across multiple channels, including phone, email, and social media. The company has a strong global presence, serving over 2,500 customers and working with more than 1,400 partners worldwide.
Five9, Inc. (NASDAQ:FIVN) is prioritizing the improvement of customer experiences by incorporating automation and AI into its offerings. These AI and automation tools are expected to be key drivers of future growth and profitability, as they offer higher gross margins than traditional contact center software. By offering a comprehensive suite of AI-powered and automated contact center solutions, Five9, Inc. stands out in the market, positioning itself for continued revenue growth and profitability.
On October 10, Five9, Inc. (NASDAQ:FIVN) announced its expanded presence in India, establishing two new data centers in Delhi and Mumbai. This expansion supports both local and multinational companies in the region, enabling them to enhance customer experience strategies. The company also acquired a Department of Telecommunications (DOT) Unified License (Virtual Network Operator) (UL VNO) in India, allowing it to offer access, national long-distance, and international long-distance services. This license also facilitates partnerships with local carriers and ISPs to provide telephony and network connectivity services in India.
Recently, Five9, Inc. (NASDAQ:FIVN) secured a significant new client, which is expected to contribute an additional $50 million in annual recurring revenue (ARR) in the coming years. The growing demand for AI-powered contact center solutions is anticipated to be a strong growth driver for Five9, Inc. (NASDAQ:FIVN). As the AI contact center market is projected to reach $14.6 billion by 2032, Five9, Inc. (NASDAQ:FIVN) is well-positioned to capture a considerable market share. The company is projected to achieve 10.18% earnings growth this year, and industry analysts have given the stock a consensus Buy rating, with an average target price of $51.96, suggesting a 53.99% potential upside from current levels.
4. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Number of Hedge Fund Investors: 35
Forward P/E Ratio as of October 23: 5.46
YTD Performance as of October 23: -62.73%
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is a global pharmacy and healthcare company with retail pharmacy chains in the U.S. and Europe. The company has been working to diversify its offerings, including expanding into healthcare services.
For the fiscal ended August 31, Walgreens Boots Alliance, Inc.’s (NASDAQ:WBA) sales grew by 6.2% to $147.7 billion. The U.S. Healthcare segment achieved an adjusted EBITDA increase of $442 million. The company exceeded its fiscal 2024 targets, including $1 billion in cost savings, a $600 million reduction in capital expenditures, and $500 million in working capital initiatives. Additionally, the company’s net debt was reduced by $1.9 billion, and lease obligations were lowered by $1.2 billion.
The company announced a footprint optimization program aimed at closing approximately 1,200 locations over the next three years, including around 500 closures in fiscal 2025. These actions are expected to be immediately accretive to adjusted EPS and free cash flow.
For fiscal 2025, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) anticipates adjusted EPS in the range of $1.40 to $1.80. While growth is expected in the U.S. Healthcare and International segments, this will be more than offset by a decline in the U.S. Retail Pharmacy, a higher adjusted effective tax rate, and reduced contributions from sale-leaseback transactions and Cencora earnings.
3. The Goodyear Tire & Rubber Company (NASDAQ:GT)
Number of Hedge Fund Investors: 36
Forward P/E Ratio as of October 23: 4.77
YTD Performance as of October 23: -42.81%
The Goodyear Tire & Rubber Company (NASDAQ:GT) is one of the world’s largest tire manufacturers, supplying products for a wide range of vehicles, including automobiles, airplanes, and heavy-duty trucks.
Despite strong brand recognition, The Goodyear Tire & Rubber Company (NASDAQ:GT) has faced challenges in managing rising material costs and global supply chain disruptions. Despite weak revenue, the company’s earnings and adjusted earnings per share in Q2 were higher than expected, and the company’s cost-cutting initiatives are showing positive progress.
The Goodyear Tire & Rubber Company (NASDAQ:GT) aims to sell $2 billion in assets and cut costs by $1.3 billion annually. The company has made significant progress in reducing operating expenses and has achieved $162 million in savings so far. Furthermore, in July The Goodyear Tire & Rubber Company (NASDAQ:GT) agreed to sell its Off-The-Road operations to Yokohama for $905 million, which will help reduce debt and improve cash flows. This sale is part of the company’s plan to divest non-core assets and focus on its core business. This sale will have a positive impact on the company’s financials and will help the company to achieve its goals.
2. Dollar Tree, Inc. (NASDAQ:DLTR)
Number of Hedge Fund Investors: 38
Forward P/E Ratio as of October 23: 11.04
YTD Performance as of October 23: -52.88%
Dollar Tree, Inc. (NASDAQ:DLTR) is an American discount retail chain operating under the brands names Dollar Tree, Family Dollar, and Dollar Tree Canada. The company operates over 16,000 stores across the U.S. and Canada. Dollar Tree sells consumables such as food, health products, and household items, along with seasonal merchandise. Family Dollar caters to a broader customer base, providing general merchandise that includes apparel, electronics, and school supplies.
Dollar Tree, Inc. (NASDAQ:DLTR) has faced challenges in the retail market due to a decline in discretionary spending as consumers prioritize essentials. On the positive side, Family Dollar saw an improvement in discretionary spending in the second quarter, and lower payroll expenses are anticipated in the near future. For Q3, net sales are projected to range between $7.4 billion and $7.6 billion, with adjusted EPS forecasted between $1.05 and $1.15. For the full year, net sales are expected to be between $30.6 billion and $30.9 billion, with adjusted EPS estimated between $5.20 and $5.60, a decrease from the previous midpoint estimate of $6.75.
Growing competition has also led the company to reevaluate its strategy. In late 2023, the company conducted a review of its store portfolio and decided to close approximately 970 underperforming stores. Dollar Tree, Inc. (NASDAQ:DLTR) is focusing on both opening new stores and converting existing ones to newer formats, such as the multi-price store format. The multi-price rollout, which has been successful in driving revenue and margin improvement, is expected to be fully rolled out by early 2025.
Dollar Tree, Inc. (NASDAQ:DLTR) unique strengths, including its loyal customer base and efficient operations, could enable it to compete effectively. Furthermore, Dollar Tree, Inc. (NASDAQ:DLTR) is strategically reviewing Family Dollar, which could potentially result in a sale, spin off or other disposition of the business.
1. ZoomInfo Technologies Inc. (NASDAQ:ZI)
Number of Hedge Fund Investors: 43
Forward P/E Ratio as of October 23: 11.15
YTD Performance as of October 23: -43.27%
ZoomInfo Technologies (NASDAQ:ZI) is a prominent provider of business intelligence software focused on sales and marketing data.
ZoomInfo Technologies Inc.’s (NASDAQ:ZI) sales and marketing platform, Copilot, offers real-time data and insights to help enhance sales and marketing strategies. This AI-powered tool is designed to empower sales and marketing professionals, providing a competitive edge. As more businesses turn to AI to optimize their sales and marketing processes, Copilot positions the company at the forefront of this shift. The tool is aimed at boosting productivity and effectiveness within sales teams, potentially driving greater platform adoption and usage.
Copilot has seen widespread adoption among existing customers, with noticeable improvements in engagement and utilization rates. This positive reception suggests the product is performing well and could significantly contribute to the company’s revenue growth.
Despite challenges within the small and medium-sized business (SMB) segment, ZoomInfo Technologies Inc. (NASDAQ:ZI) has demonstrated stabilization and growth in its upmarket segment. In Q2, the company reported a 5.6% year-over-year decline in total revenue, primarily due to underperformance in the SMB market. However, encouraging signs of demand stabilization emerged, with customer growth metrics improving after several quarters of decline.
While we acknowledge the potential of ZI to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ZI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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