The Nasdaq is down 27% this year, and that can be incredibly discouraging for growth investors. However, the tech-heavy index has still delivered impressive growth over a longer time frame. Over the past five years, the index remains up 77% vs. 54% for the S&P 500. The moral of the story is that long-term investors should not ignore the Nasdaq.
Three Nasdaq-based stocks that are full of potential today are DexCom (DXCM +0.91%), Meta Platforms (META +0.58%), and Comcast (CMCSA 0.76%). They're all down 30%, but here's why they're still good buys.
NASDAQ: DXCM
Key Data Points
1. DexCom
DexCom makes continuous glucose monitoring (CGM) devices that help diabetes patients control their blood sugar levels. The stock has taken a beating this year, falling 35%. But focusing on the short term could be a costly mistake for investors as this has the potential to be a phenomenal long-term buy.
What I like most about the business, beyond its potential to meet an important need in a growing diabetes market, is that it generates incredible margins. Over the past four quarters, DexCom's gross margin of $1.8 billion has been 66% of its revenue ($2.7 billion). And while its profits may be relatively minimal, just $168 million in the past year, they should improve as the business continues to expand into more markets -- thanks to its strong margins.
This year, DexCom projects that its top line could rise by as much as 19%. Another positive is that the business has also generated positive free cash flow in three of the past four quarters. DexCom's solid financials, strong margins, and promising growth opportunities all make the healthcare stock an attractive buy at its discounted price.
NASDAQ: META
Key Data Points
2. Meta Platforms
Shares of Meta Platforms haven't been this low since the 2020 market crash. Down 57% this year, it has been an all-out disaster for what still remains a top growth stock.
Investors have been in panic mode as the company's sales of $28.8 billion for the period ended June 30 were down 1% from the prior-year period. However, it's hard to blame that on the company. Issues in the macro environment are more at fault; advertisers are pulling back on spending amid inflation and concerns of a looming recession.
This isn't a problem that's likely to persist, and it has weighed on other tech stocks beyond just Meta. The company still has more than 3.6 billion monthly active users across its social media sites (Facebook, Instagram, WhatsApp), which is a 4% increase from a year ago. That makes it likely that when companies get back to spending on ads, Meta will attract a lot of those dollars.
Meta is still an incredibly successful business, generating $119.4 billion in sales over the past four quarters and netting a profit of $33.6 billion on that amount. At a ridiculously low 12 times earnings (the average tech stock trades at a multiple of 23), this is a stock that investors shouldn't pass up the opportunity to buy today.
NASDAQ: CMCSA
Key Data Points
3. Comcast
Another growth stock trading at a low earnings multiple is Comcast. Investors are currently paying just 11 times earnings for the telecom business after the shares fell 32% this year -- the smallest decline of the stocks listed here. And it's easy to make a case for why the stock could do better in the future.
Comcast's revenue topped $30 billion last quarter (ended June 30) and rose 5% year over year. A big reason for the boost: sales at its theme parks, which have skyrocketed 65% year over year as people emerge from their homes begin traveling again.
The company could do even better, however, as it continues to grow its streaming business, Peacock. At just 13 million paid subscribers, the service is still scratching the surface in terms of potential; both Disney and Netflix have subscriber numbers in excess of 200 million. Comcast is also becoming more aggressive in its wireless business, rolling out cheaper plans to customers that could drive growth there.
In addition to growth potential, Comcast also pays investors a dividend yield of 3.1%, which is notably higher than the S&P 500 average of 1.7%. For long-term investors, Comcast offers a bit of everything and is yet another solid stock to consider buying today.
