3 Nasdaq Stocks to Buy and Hold for Years There's no question that stocks in the Nasdaq composite index have seen massive gains over the last year and a half. Even after taking a back seat to cyclicals late...
By David Cohne
This story originally appeared on StockNews
There's no question that stocks in the Nasdaq composite index have seen massive gains over the last year and a half. Even after taking a back seat to cyclicals late last year, the index continues to hit new heights. That's why investors should focus on Nasdaq stocks that offer the best long-term prospects. Qualcomm Inc. (QCOM), Amgen Inc. (AMGN), and Workday, Inc. (WDAY) are three that are certainly worth a look.
Since March 16th of last year, the Nasdaq composite has been on a roll, up almost 130%. Every time it seems like that run is over, the index keeps pushing through and continues to hit new record highs. Much of this growth started last year when pandemic-related restrictions led to work and learning from the home environment.
This fast-tracked the transition to the digital age and a lot of technology companies benefited. As I write this, the Nasdaq is only 180 or so points from 16,000. Even at the end of last year and into this year when cyclical stocks took leadership in the market, tech stocks have rallied back as corporate profit margins continue to show strong growth.
There's no turning back now as technology plays a role in almost every aspect of our life, and biotech holds the key to our future. The question is, which stocks should investors buy and hold for the long term. To answer that question, I turned to our proprietary POWR Ratings system for the answer. Qualcomm Inc. (QCOM), Amgen Inc. (AMGN), and Workday, Inc. (WDAY) are three companies that certainly fit the bill.
Qualcomm Inc. (QCOM)
QCOM develops and licenses wireless technology and designs chips for smartphones. The company's key patents revolve around CDMA and OFDMA technologies, which are standards in wireless communications that are the backbone of all 3G and 4G networks. QCOM is also a 5G network technology leader, and virtually all wireless device makers license its IP.
The company recently reported strong earnings results where both earnings and revenues rose year over year. Results were driven by a ramp-up in 5G-enabled chips, and an increase in demand for products and services considered the building blocks for the digital transformation in the cloud space.
QCOM is expected to benefit from strong 5G traction and robust sales from Automotive, Internet of Things (IoT), and RF front-end. The company has an overall grade of B, which translates into a Buy rating in our POWR Ratings system. QCOM has a Value Grade of B, which makes sense with a forward P/E of only 15.46. The company also has a Quality Grade of B due to solid fundamentals.
As of the end of the most recent quarter, QCOM had $12.4 billion in cash compared to only $2 billion in short-term debt. We also provide Growth, Momentum, Stability, and Sentiment Grades for QCOM, which you can find here. QCOM is ranked #8 in the B-rated Semiconductor & Wireless Chip industry. For more top stocks in this industry, click here.
Amgen Inc. (AMGN)
AMGN is a leader in biotechnology-based human therapeutics, with historical expertise in renal disease and cancer supportive care products. Its flagship drugs include red blood cell boosters Epogen and Aranesp, immune system boosters Neupogen and Neulasta, and Enbrel and Otezla for inflammatory diseases.
Both earnings and revenues rose in the recently reported second quarter. This was due to higher volumes. Growth was driven by sales of Repatha, Prolia, Evenity, and biosimilar drugs. AMGN also saw a recovery in patient visits and lab test procedures. The company is also advancing its pipeline with oncology drugs.
These have the potential to provide substantial revenue growth going forward. Its biosimilars portfolio is also expected to drive long-term growth. AMGN has an overall grade of A and a Strong Buy rating in our POWR Ratings system. The company has a Value Grade of B, which isn't surprising, with a forward P/E of 11.90.
AMGN also has a Quality Grade of A due to a rock-solid balance sheet. Its current ratio of 1.6 indicates it has more than enough liquidity to handle short-term obligations, and its return on equity looks strong at 68.3%. For the rest of AMGN's grades (Growth, Momentum, Stability, and Sentiment), click here. AMGN is ranked #2 in the Biotech industry. For more top-ranked stocks in this industry, make sure to visit this link.
Workday, Inc. (WDAY)
WDAY is a software company that offers human capital management, financial management, and business planning solutions. Its cloud-based platform combines finance and HR in one system, making it easier for organizations to provide analytical insights and decision support. The company also offers open, standards-based web-services application programming interfaces.
While WDAY's third quarter won't be reported until November 18th, we can get a glimpse of its recent performance from its second-quarter report, where earnings surged 46.4% year over year, and sales rose 18.7% year over year. These results were driven by strong growth in its revenues from subscription services due to an expanding customer base.
Plus, it's been able to secure deal wins due to its acquisitions of Scout RFP and Peakon. Its user base is also expected to receive a boost from extended capabilities and tools in its Human Capital Management and FINS Plus solutions. WDAY has an overall grade of B, translating into a Buy rating in our POWR Ratings system.
The company has a Growth Grade of A as analysts expect earnings to rise 25.3% for the year. WDAY also has a Sentiment Grade of B as it's well-liked by the "Smart Crowd." Twenty-eight Wall Street analysts currently have a Buy or Strong Buy rating on the stock. To access all of WDAY's grades, including Value, Momentum, Stability, and Quality, click here.
WDAY is ranked #24 in the Software – Application industry. For more top stocks in this industry, click here.
Discover Today's Best Value Stocks
This article was written by David Cohne, Chief Value Strategist for StockNews.com. David has helped investors find the most profitable stocks for over 20 years.
If you would like to see more of his best value stock ideas, then click the link below.
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QCOM shares rose $1.95 (+1.22%) in premarket trading Thursday. Year-to-date, QCOM has gained 7.28%, versus a 25.71% rise in the benchmark S&P 500 index during the same period.
About the Author: David Cohne
David Cohne has 20 years of experience as an investment analyst and writer. He is the Chief Value Strategist for StockNews.com and the editor of POWR Value newsletter. Prior to StockNews, David spent eleven years as a consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers.
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