The NASDAQ -- which is an acronym for National Association of Securities Dealers Automated Quotations -- is the second-largest stock exchange in the U.S. by market capitalization, trailing only behind the New York Stock Exchange (NYSE). The NASDAQ consists of more than 3,000 companies, most being technology companies, and is sometimes used interchangeably with the Nasdaq Composite (^IXIC 0.10%) index, which includes almost every stock listed on the NASDAQ stock exchange.
To be eligible for the Nasdaq Composite index, a company must be exclusively listed on the NASDAQ stock exchange and must be a common stock -- no preferred stocks or exchange-traded funds (ETFs) are allowed. As the NASDAQ soars, here are two stocks you should keep an eye out for.
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Nvidia
Nvidia (NVDA -3.33%)is a giant in the chip manufacturing industry, specializing in graphic processing units (GPUs) and semiconductors. Like many other companies, Nvidia's stock had an impressive performance during the 2020/2021 bull run, with its price rallying from $51.44 on March 20, 2020, to more than $329 on November 21, 2021. While the stock has since experienced a correction, dropping to around $226 per share, the company is in a good position to continue its hypergrowth.
In 2021, Nvidia brought in a record of $26.91 billion in revenue, up 61% from 2020. The company made $7.64 billion in revenue in the fourth quarter alone, up from 53% year over year and 8% from the third quarter. This financial success allowed the company to pay out $399 million in dividends in 2021 ($100 million in the fourth quarter). Most of this success has come from the company's gaming, data center, and professional visualization arms of its business, and those may be key driving forces that allow this success to continue in the long term.
Nvidia can really stand out in semiconductor production, an industry that has seen steady growth over the past two decades. In 2019, there was $412.3 billion in global semiconductor sales. In 2020, that number jumped up 6.8% to $440.4%, and for 2022, the World Semiconductor Trade Statistics forecasts global sales to reach $573 billion.
As the company positions itself as a giant in the GPU and semiconductor markets and becomes a key player in bringing the metaverse to life, it's poised for success in the long run.
PepsiCo
PepsiCo (PEP 3.62%) remains in the minority as a non-technology company in the NASDAQ, but the beverage giant can be a good place for investors as market uncertainty continues. Like many stocks in 2022, PepsiCo has seen its stock price drop amid what many consider to be the beginning of a bear market. Although the company is down around 8% as of March 15, 2022, it's still up 19% from March 15, 2021.
In 2021, PepsiCo's revenue grew by 12.9%, and in the fourth quarter alone, it grew by 12.4%. While lower than the 2020 to 2021 revenue growth, the company says it expects organic revenue to grow by 6% in 2022.
However, what can really be attractive to investors is the company's dividend payout. Currently, the company's annual dividend is $4.30 per share, but they announced they will increase the payout by 7% to $4.60. This is the 50th consecutive time PepsiCo has increased its annual dividend payout -- a sign that the company has been able to financially withstand broader economic downturns and reward investors.
With notable brands like Pepsi, Lay's, Tropicana, Quaker, and Gatorade, and a position as a blue-chip stock, PepsiCo is in a position to not only maintain but also flourish through a time when many other companies are seeing their appeal diminish with the market correction currently taking place. While it's no guarantee the stock's price will have a positive year, the one thing investors can bank on is those quarterly dividend payments.
