In this article, we take a look at 11 cheap NASDAQ stocks to buy. If you want to see more cheap NASDAQ stocks to buy, go directly to 5 Cheap NASDAQ Stocks to Buy.
NASDAQ stocks are stocks listed on stock exchange named, ‘The Nasdaq Stock Market’, which is also commonly just known as the Nasdaq.
In terms of the Nasdaq, it is the largest U.S. equities exchange by volume and also the first electronic stock exchange in the world given its founding in 1971. As an electronic stock exchange, the Nasdaq has no psychical trading floors and is instead built on an automated network of computers that match buy and sell orders.
By being fully electronic, there is potential for the Nasdaq to be faster than its main competitor, The New York Stock Exchange, which has a hybrid system that includes both an electronic trading network and a physical trading floor.
As an electronic only stock exchange, it is perhaps more fitting that the Nasdaq is home to many big tech companies such as Meta Platforms, Inc. (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT) whose stocks are listed on the exchange.
Given the growth of the technology industry in the last three decades, the market capitalization of some of the stocks listed on the Nasdaq has increased substantially.
2022
Given high inflation in 2022, the Federal Reserve has raised interest rates seven times this year. As a result of the interest rate increases, Treasury yields have increased substantially and capital has moved from the tech sector into U.S. government bonds as a result.
As a result of the capital outflow, the valuations of many growth companies and big tech companies listed on the Nasdaq have decreased.
The Nasdaq Composite, which is a market capitalization weighted stock market index that includes nearly all of the stocks listed on the Nasdaq stock exchange, has decreased substantially as a result.
Given the decrease, some leading blue chip stocks listed on the Nasdaq arguably trade below their intrinsic values, which make them potentially ‘cheap’ stocks.
Given the uncertainty, it could be a good idea for long term investors to own a well diversified portfolio of stocks across many different sectors, however.
Photo by Bryan Angelo on Unsplash
Methodology
For our list of 11 Cheap NASDAQ Stocks to Buy, we picked 11 stocks listed on the Nasdaq that had competitive competitive advantages that arguably trade below their intrinsic values.
We then ranked the stocks based on the number of hedge funds in our database that held shares in the same stock at the end of Q3.
For those of you interested, check out 15 Biggest Global Tech Companies by Market Cap.
11 Cheap NASDAQ Stocks to Buy
11. Nasdaq, Inc. (NASDAQ:NDAQ)
Number of Hedge Fund Holders: 32
Nasdaq, Inc. (NASDAQ:NDAQ) is the owner of the stock exchange named, ‘The Nasdaq Stock Market’. While shares of Nasdaq, Inc. (NASDAQ:NDAQ) have declined 13.4% year to date, the company’s most recent quarterly earnings have nevertheless increased.
For Q3, Nasdaq, Inc. (NASDAQ:NDAQ)’s third quarter net sales rose 6% year over year and adjusted diluted EPS increased 15% year over year to $0.68 per share.
Although its valuation could decrease in the near term if overall tech valuations decrease, Nasdaq, Inc. (NASDAQ:NDAQ) could nevertheless prove cheap in the long term if it continues its earnings growth.
Alongside Meta Platforms, Inc. (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT), Nasdaq, Inc. (NASDAQ:NDAQ) is a NASDAQ stock that many hedge funds in our database owned at the end of Q3.
10. ASML Holding N.V. (NASDAQ:ASML)
Number of Hedge Fund Holders: 51
ASML Holding N.V. (NASDAQ:ASML) is a leading maker of semiconductor production equipment. Given the barriers to entry in the company’s niche, ASML Holding N.V. (NASDAQ:ASML) has very few legitimate competitors. As a result, ASML Holding N.V. (NASDAQ:ASML) has substantial pricing power and substantial earnings growth potential given the expected increases in semiconductor demand in the future.
Although its shares trade for a forward P/E ratio of 30.02, ASML Holding N.V. (NASDAQ:ASML)’s high quality business and its earnings growth potential make the stock cheap.
9. CME Group Inc. (NASDAQ:CME)
Number of Hedge Fund Holders: 60
CME Group Inc. (NASDAQ:CME) is a marketplace company that operates the world’s largest financial derivatives exchange. While its shares have declined 25.1% year to date, CME Group Inc. (NASDAQ:CME)’s business remains relatively steady, which arguably could make the stock cheap in the long term. In terms of the marketplace’s November statistics, average daily volume rose 1% year over year to 23.5 million contracts, representing the highest November volume on record.
Baron Funds commented on CME Group Inc. (NASDAQ:CME) in a Q3 2022 investor letter,
CME Group Inc. (NASDAQ:CME) operates the world’s largest and most diversified derivatives marketplace. Shares fell 13% during the quarter (despite reporting strong average daily trading volume growth of 26% year-over year) due to concerns that EPS growth will slow in 2023 as the rate hike cycle comes to an end. We continue to own the stock due to CME’s strong competitive moats, its product breadth and liquidity depth, its durable growth characteristics driven by the secular shift from uncleared over-the-counter trading to exchange-traded futures, and tailwinds from the rising rate environment.
8. CSX Corporation (NASDAQ:CSX)
Number of Hedge Fund Holders: 61
Given its year to date decline of 15.82%, CSX Corporation (NASDAQ:CSX) trades for a forward P/E ratio of 16.65, which is attractive in terms of the long term given railroad’s competitive advantages.
Considering railroads are an oligopoly, CSX Corporation (NASDAQ:CSX) has pricing power which helps the company increase earnings despite the tough macroeconomic environment. For Q3, CSX Corporation (NASDAQ:CSX)’s diluted EPS rose 21% year over year to $0.52 and its sales rose 18% year over year to $3.9 billion.
Of the 920 hedge funds in our database, 61 owned shares of CSX Corporation (NASDAQ:CSX) at the end of Q3, ranking the stock #8 on our list of 11 Cheap NASDAQ Stocks to Buy.
7. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 72
Beverage and snack maker PepsiCo, Inc. (NASDAQ:PEP) has a high quality business given its shares are near an all time high at a time when the S&P 500 has declined 19.68% year to date and the Nasdaq Composite index has fallen 32.38% year to date.
One reason for the strong performance is that analysts expect PepsiCo, Inc. (NASDAQ:PEP) to earn $6.78 per share in 2022, $7.29 per share in 2023, and $7.92 per share in 2024. If PepsiCo, Inc. (NASDAQ:PEP) can keep increasing its earnings like analysts expect, the company could be cheap in the long term.
6. Comcast Corporation (NASDAQ:CMCSA)
Number of Hedge Fund Holders: 73
Comcast Corporation (NASDAQ:CMCSA) is a leading entertainment and communications conglomerate whose shares have declined 31.47% year to date. Given the decline, the company trades for a forward P/E ratio of 9.17 which could be cheap if Comcast Corporation (NASDAQ:CMCSA) meets earnings estimates for the future.
In terms of the next three years, analysts expect the company to steadily grow profits given the earnings estimate of $3.59 per share in 2022, $3.75 per share in 2023, and $4.18 per share in 2024.
Like Comcast Corporation (NASDAQ:CMCSA), Meta Platforms, Inc. (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT) are NASDAQ stocks that many hedge funds in our database owned at the end of the third quarter.
Click to continue reading and see 5 Cheap NASDAQ Stocks to Buy.
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Disclosure: None. 11 Cheap NASDAQ Stocks to Buy is originally published on Insider Monkey.
