Long-term investors who've allowed time to be their greatest ally have been rewarded handsomely since the Great Recession bottom nearly 13 years ago. The broad-based S&P 500 and iconic Dow Jones Industrial Average have galloped higher by 589% and 449%, respectively, since their Great Recession closing lows in March 2009.
However, the Nasdaq 100, an index comprised of 100 of the largest nonfinancial companies listed on the Nasdaq exchange, has been nothing short of lights-out. Driven predominantly by high-growth tech stocks, the Nasdaq 100 has gained about 1,400% since its March 2009 low.
In spite of this significant outperformance, incredible deals can still be found. In 2022, investors can confidently buy the following trio of Nasdaq 100 stocks hand over fist.
Image source: Getty Images.
Amazon
Historically, every double-digit percentage decline from an all-time high for e-commerce giant Amazon (AMZN -2.53%) has represented a buying opportunity for patient investors. With Amazon roughly 14% below its all-time intra-day high, it's the perfect Nasdaq 100 stock for investors to scoop up.
Most people are familiar with Amazon because it's an absolutely dominant online marketplace. This past summer, eMarketer estimated that Amazon would account for a whopping 41.4% of all online sales in the U.S. That's more than 34 percentage points higher than the next-closest competitor, Walmart.
However, being the premier online retailer doesn't do much for Amazon's operating margins. That's why the company has wisely promoted its Prime subscription. The roughly 200 million Prime members receive free two-day shipping on most items, as well as other perks, such as access to Amazon's growing content library. For Amazon, the annual fee Prime members pay provides a margin buffer that allows the company to undercut brick-and-mortar retailers on price. Additionally, it helps keep customers loyal to its ecosystem of products and services.
But Amazon's true bread and butter is its cloud infrastructure services segment, Amazon Web Services (AWS). During the third quarter, AWS brought in nearly a third of all global cloud infrastructure spend.
The reason AWS is so important is twofold. First, anything having to do with cloud computing is still in the early innings of growth. Sales for AWS have consistently grown by 30% or more on a year-over-year basis, with no signs of significant slowing. Second, the profit margin associated with cloud services is substantially higher than online retail sales. Even though AWS accounted for only 13% of net sales in the September-ended quarter, the segment brought in 62% of the company's $21.4 billion in Q3 operating income.
Amazon's faster-growing, higher-margin segments, like AWS, subscriptions, and advertising, are what'll be responsible for more than doubling its operating cash flow per share over the next three or four years.
Image source: Getty Images.
CrowdStrike Holdings
Following a pullback of around 40%, cybersecurity stock CrowdStrike Holdings (CRWD -4.06%) is another Nasdaq 100 company that can be confidently bought hand over fist in 2022.
I've said it before, and I'll say it again: While there are numerous trends expected to sustainably grow by a double-digit annual percentage throughout the decade, cybersecurity is likely the safest and most stable of those trends. Cybersecurity has evolved into a necessary service for businesses of all sizes as enterprise and customer data shifts online and into the cloud.
CrowdStrike, which is the premier name in end-user protection, receives its acclaim from the Falcon security platform. Falcon is built in the cloud and relies on artificial intelligence to grow more efficient at recognizing and responding to threats over time. Falcon oversees an estimated 1 trillion events daily, according to the company.
What's crystal clear is that businesses are onboard with CrowdStrike's security solutions. In less than five years, the company's subscribing customer count has skyrocketed from 450 to almost 14,700. Even more impressive, the percentage of these clients with a subscription to four or more of CrowdStrike's cloud-module solutions has grown from a single-digit percentage to 68% over the same time frame. In other words, CrowdStrike isn't just gaining new clients -- it's having existing clients significantly expand the types of solutions being deployed each year. Not surprisingly, CrowdStrike has a revenue retention rate of around 98%.
The best thing about the subscription-based cybersecurity operating model is that it generates mouthwatering margins. Despite still being in the early stages of its growth, CrowdStrike has already hit its long-term subscription gross margin target of 77% to 82%+.
CrowdStrike is profitable, growing rapidly, and well-liked by businesses. In sum, it's the premier stock to buy in cybersecurity.
Image source: Getty Images.
Walgreens Boots Alliance
For you value stock investors, the third Nasdaq 100 stock that's begging to be bought in 2022 is pharmacy chain Walgreens Boots Alliance (WBA 3.73%).
Normally, defensive stocks, including healthcare companies, tend to fare pretty well when recessions strike. Because we can't choose when we get sick or what ailment(s) we develop, there's always demand for prescription drugs, medical devices, and healthcare services, no matter how well or poorly the U.S. economy is doing.
But the coronavirus pandemic was a unique event for pharmacy chains like Walgreens, which are reliant on foot traffic. The initial stages of the pandemic caused front-end sales and clinic revenue to plummet, which in turn sent Walgreens' share price lower.
Now, for some good news: Walgreens Boots Alliance is well into a multiyear turnaround plan that's designed to cut unnecessary costs, lift margins, and promote organic growth opportunities at the grassroots level.
For instance, management set out to reduce the company's annual operating expenses by $2 billion for fiscal 2022. However, more than $2 billion in annual costs were cut in fiscal 2021, a full year ahead of schedule. Despite these cuts, the company has aggressively invested in digitization initiatives designed to promote online sales and/or drive-thru pick-up. Even though its brick-and-mortar locations will continue to provide the bulk of its sales, direct-to-consumer initiatives are a sustainable double-digit growth opportunity.
Equally exciting is Walgreens' partnership with VillageMD that'll see the duo open more than 600 full-service clinics by 2025, and around 1,000 by 2027, in over 30 U.S. markets. Having physician-staffed clinics is a differentiator that should draw in repeat business at the local level. It should also lift demand for the company's higher-margin pharmacy.
A forward price-to-earnings ratio of 10 is still a great deal for Walgreens Boots Alliance.
