Investing in 2022 has been historic... in all the wrong ways. The widely followed S&P 500 produced its worst first-half return since Richard Nixon was president, and the Federal Reserve is aggressively hiking interest rates as the stock market plunges for the first time in history.
But the real pain has been felt by growth-stock investors. The innovation-driven Nasdaq Composite and Nasdaq 100 -- the Nasdaq 100 is comprised of the 100-largest non-financial Nasdaq-listed companies -- have both lost over a third of their value on a peak-to-trough basis.
However, pain on Wall Street often begets opportunity. Though sentiment surrounding growth stocks is poor, a number of amazing deals stand out for patient investors within the Nasdaq 100. What follows are three Nasdaq 100 stocks investors can confidently buy hand over fist in November.
The first Nasdaq 100 stock that's an absolute screaming buy in November is fintech-giant PayPal Holdings (PYPL 3.35%). Despite low earners being hammered by historically high inflation, PayPal's long-term growth trajectory remains unchanged.
While estimates vary wildly, the digital-payments market should remain one of the fastest-growing trends on the planet through at least mid-decade, if not well beyond. A September-released report from Fortune Business Insights projects a 24.4% compound annual growth rate for global digital payments between 2018 and 2026, with the industry ultimately hitting $19.9 trillion in value by 2026. PayPal could very easily be the most prominent digital-payments player of a nearly $20 trillion industry that's still in the early innings of its growth.
For example, even though the U.S. and global economy are facing numerous headwinds at the moment, total payment volume on PayPal's various digital networks grew by a double-digit percentage during the June-ended quarter, excluding currency movements. That alone demonstrates how powerful the ongoing shift is toward digital transactions.
As a shareholder, what I've found to be more impressive about PayPal is its user-engagement statistics. In just 18 months, the number of transactions completed by active accounts over the trailing 12 months jumped from 40.9 to 48.7. PayPal is a fee-driven business, which means that more transactions would be expected to lead to higher gross profit.
The company also has levers it can pull to make itself more attractive to investors in a challenging environment. CEO Dan Schulman has outlined plans to reduce costs by $900 million this year and expand annual cost reductions to $1.3 billion in 2023. Mind you, these cost savings aren't going to come at the expense of PayPal's ongoing research into new digital-payment initiatives.
If you need one more good reason to jump into PayPal right now, consider that you can buy shares at a multiple of just 18 times Wall Street's forecast earnings for 2023. That's historically cheap for a company that delivers consistent double-digit sales growth.
A second Nasdaq 100 stock that can be bought hand over fist in November is biotech-stock Vertex Pharmaceuticals (VRTX -0.83%). The company has bucked Wall Street's downtrend in 2022 and can continue to do so, thanks to its competitive advantages, pipeline, strong balance sheet, and valuation.
Although Vertex had short-lived success in treating patients with Hepatitis C a little over a decade ago, it's the company's cystic fibrosis (CF) franchise that's really put it on the map. CF is a genetic disease characterized by thick mucus production that can adversely impact a patient's lung function and pancreas.
There's currently no cure for CF, but Vertex has developed four generations (and counting) of mutation-specific therapies designed to improve lung function. The newest of these therapies is Trikafta, which was approved by the U.S. Food and Drug Administration five full months ahead of its scheduled review date in 2019.
Initially expected to tally $6 billion in peak annual sales, Trikafta is now pacing over $8 billion in annual run-rate revenue. A label expansion to the age 6 to 11 crowd has helped sales, as does the fact that it targets the most common CF mutation (f508del). For the time being, Vertex absolutely dominates the CF research and treatment space.
But there's excitement beyond just CF. Although Vertex has had some clinical disappointments in recent years (what biotech stock hasn't, at some point?), the company's drug-development platform has a history of delivering success at a reasonably high rate. For instance, the company is submitting its biologics licensing application for exagamglogene autotemcel (thankfully known as exa-cel for short) this month. Exa-cel, formerly CTX001, was developed in collaboration with CRISPR Therapeutics and offers a functional cure for patients with severe sickle cell disease and transfusion-dependent beta thalassemia.
Another thing to love about Vertex is that the company is swimming with cash. Vertex ended September with nearly $9.8 billion in cash, cash equivalents, and marketable securities. This mammoth cash pile is being used for ongoing clinical research and might even be relied on to make acquisitions that could further diversify the company's pipeline or product portfolio.
The final point I'll make is that it's still cheap, even near an all-time high. Investors can buy shares of Vertex for about 20 times Wall Street's projected earnings for 2023.
The third Nasdaq 100 stock to buy hand over fist in November is China-based internet-search behemoth Baidu (BIDU -1.60%).
Baidu has dealt with a litany of issues since the beginning of 2021, including the threat of regulatory crackdowns in China, possible Nasdaq delisting in the U.S., and China's zero-COVID strategy, which has wreaked havoc on a multitude of sectors, industries, and supply chains. In spite of these issues, Baidu seems to have paid its penance (and then some).
The first thing investors should understand about Baidu is that it's the search kingpin in China. According to data from GlobalStats, Baidu held a 63.2% share of internet search in China as of September 2022. The next-closest competitor, Microsoft's Bing, was 50 percentage points back.
China is the world's No. 2 economy, and businesses are fully aware that paying a premium to get their message in front of consumers on China's go-to internet search site is a smart move. Expect Baidu to maintain strong ad-pricing power and generate significant cash flow from its foundational operating segment.
But keep in mind that Baidu's future is about far more than just internet search. This is a company that's been aggressively investing in cloud-computing and artificial intelligence (AI)-based innovations. Despite economic malaise in China, Baidu's AI Cloud reported 31% year-over-year sales growth in the June-ended quarter.
The other thing to note about cloud and AI investments is they can drive superior gross margin and operating margin, relative to the margins derived from advertising. As these faster-growing and higher-margin ancillary segments grow into a larger percentage of total sales, Baidu should benefit from higher earnings and cash-flow generation.
Lastly, Baidu is historically inexpensive. Though Wall Street's forward-looking earnings estimates remain fluid in an uncertain economic environment, shares of the company can be purchased for less than 9 times projected earnings in 2023. I don't want to sound like a broken record, but for a company with a history of double-digit sales growth and competitive advantages, a forward-earnings multiple of 9 doesn't do it justice.