3 Nasdaq 100 Laggards You Can Buy Right Now

Welcome back to 1999. The new year has started off with such a bang that the Nasdaq Composite is up 11.5% year to date, and Seattle cab drivers are back to doling out stock advice.

Just to give you an idea of how universal the rally has been, the Nasdaq 100, an index comprised of 100 nonfinancial companies, has just eight components down for the year. Rather than focusing on what stock could be the next to rally higher, I think it's more worthwhile to take a look at the eight laggards to determine whether the market may have overlooked some potentially good companies.

Below I've listed three Nasdaq 100 laggards that you could buy right now, as well as two that I feel you'd be better off avoiding.


Year-to-Date Percentage Move

Apollo Group (1.8%)
C.H. Robinson Worldwide (Nasdaq: CHRW  ) (9.6%)
Electronic Arts (Nasdaq: EA  ) (10.2%)
Google (Nasdaq: GOOG  ) (6.1%)
SanDisk (Nasdaq: SNDK  ) (6.7%)
Urban Outfitters (2.4%)
Vodafone Group (0.3%)
Yahoo! (1.9%)

Sources: Yahoo! Finance and author's calculations using Feb. 7 closing prices.

Three companies you can buy right now:

  • Google -- Many investors took Google's fourth-quarter report as reason to run kicking and screaming out the front door. I took it as just another solid quarter from Google. Overall, revenue grew by 25%, with paid clicks jumping 34% and traffic acquisition costs actually falling by 1% over the year-ago period. Google is still growing like wildfire and it has the balance sheet to work its way into new sectors more or less at will.
  • Electronic Arts -- EA might be the worst performer on the Nasdaq 100 year to date, but I don't think that will last for long. EA shocked Wall Street with a much-better-than-expected third-quarter report last week and trounced the consensus sales estimates. Driving sales higher were EA's lead gaming titles, Battlefield 3, Star Wars: The Old Republic, and FIFA 12. The real driving force here is EA's digital revenue, which surged 79% thanks to a 442% year-over-year jump in full downloads and a 25% rise in mobile and digital handheld revenue. EA is poised to do just fine going forward.
  • C.H. Robinson Worldwide -- Not to beat a dead horse, because I did just recommend C.H. Robinson yesterday, but investors are overlooking a great company because of a nominal earnings miss. C.H. has managed to pass along fuel price increases to its customers for the past decade and has given shareholders five straight quarters of double-digit revenue growth. Now is not the time to run away from C.H. Robinson.

And two companies to avoid altogether:

  • SanDisk -- I've cautioned investors about owning SanDisk on more than one occasion. The problem with the memory business is that the product is highly commoditized -- with little control over the pricing of its memory, SanDisk's margins can evaporate very quickly. This is more a stock to play as a range than as a long-term buy-and-hold. Since it's currently at the top of its range, I'd advice flipping the off switch on this trade.
  • Yahoo! -- As a testament to the dysfunctional nature of the Yahoo! management team, it would be one of the worst-performing companies when the Nasdaq is up 11.5% year to date. Yahoo! has been losing market share for years, and I think the only real reason to own the stock is because of its stake in Alibaba. Avoid the temptation to be drawn into the perpetual buyout speculation and leave Yahoo! to the wolves.

Foolish roundup
Sometimes, playing the contrarian can be quite profitable. What stocks that are currently underperforming the indexes are on your buy list? Share them in the comments section below and consider adding these five stocks to your free and personalized watchlist.

Also, our team of Rule Breakers specializes in finding contrarian plays. I invite you to download our latest report, "The Next Rule-Breaking Multibagger," to see which stock our team thinks is ready to explode higher. Did I mention that this report is completely free?

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He loves to play the contrarian. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. The Motley Fool owns shares of Google, Microsoft, and Yahoo!. Motley Fool newsletter services have recommended buying shares of Google, Microsoft, Yahoo!, and Vodafone Group. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that believes transparency is a trend worth following.

Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1776060, ~/Articles/ArticleHandler.aspx, 10/22/2016 3:43:11 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 6 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
CHRW $68.86 Up +0.11 +0.16%
C.H. Robinson Worl… CAPS Rating: ****
EA $82.87 Up +0.35 +0.42%
Electronic Arts CAPS Rating: ***
GOOGL $824.06 Up +2.43 +0.30%
Alphabet (A shares… CAPS Rating: *****
SNDK.DL $0.00 Down +0.00 +0.00%
SanDisk CAPS Rating: ***