It's been an interesting past two years for Wall Street. In 2021, the major U.S. stock indexes could do no wrong and hit multiple new all-time highs. Meanwhile, in 2022, all three major stock indexes plunged into a bear market, with the growth-focused Nasdaq Composite and Nasdaq 100 -- an index comprised of the 100 largest nonfinancial companies listed on the Nasdaq exchange -- each losing a third of their value.
But when there's peril on Wall Street, there's typically opportunity, especially for long-term-minded investors. The pummeling growth stocks endured last year has provided plenty of opportunity for patient investors to pounce. The Nasdaq 100, in particular, is housing a number of top-tier businesses that can make their shareholders richer.
What follows are three Nasdaq 100 stocks that are surefire buys in the month of June.
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Sirius XM Holdings
The first Nasdaq 100 stock that investors can confidently buy hand over fist in June is satellite-radio operator Sirius XM Holdings (SIRI).
A quick look at Sirius XM's chart shows it's had a rough year. The building expectation that the U.S. will dip into a recession later this year isn't sitting well with Wall Street. Radio operators are often heavily reliant on advertising revenue, which tends to quickly head into reverse immediately prior to and during a recession.
What's more, Sirius XM counts on new vehicle sales to transition promotional users into self-pay subscribers. If an economic downturn arises, new vehicle sales would more than likely decline, which means fewer opportunities in the short run for Sirius XM to convert promotional accounts to self-pay subscriptions.
While these do represent tangible concerns for the company and its shareholders, they aren't game-changers. For example, advertising doesn't play nearly as big of a role for Sirius XM as it does for terrestrial and online radio providers. During the first quarter, only 17.5% of its $2.14 billion in net sales derived from advertising. Meanwhile, $1.69 billion (78.9%) came from subscription revenue. This difference in revenue recognition is important. Whereas advertisers are quick to pare back their spending when economic weakness arises, subscribers are much less likely to cancel. It should allow Sirius XM to weather any downturn better than its peers.
Another key point about Sirius XM that shouldn't be overlooked is its legal monopoly status. It's the only authorized satellite-radio provider. Operating a legal monopoly gives Sirius XM relatively strong pricing power more often than not. It's used this pricing power to acquire talent, as well as pay a dividend.
If you need another reason to be excited about Sirius XM's future, look no further than its cost structure. As I noted earlier this year, shortly after I added shares of Sirius XM to my own portfolio, it deals with a number of relatively fixed costs, including transmission and equipment expenses. The beauty of this setup is that the company can, hypothetically, add millions of new subscribers, and it's not going to cost a dime extra in transmission expenses. Over time, this should allow Sirius XM to expand its operating margin.
Valued at less than 12 times Wall Street's consensus earnings for 2024, Sirius XM is as cheap as it's ever been as a publicly traded company.
AstraZeneca
A second Nasdaq 100 stock that stands out as a surefire buy in June is pharmaceutical company AstraZeneca (AZN 0.49%).
The big knock against AstraZeneca had been the company's handling of the patent cliff. Between 1997 and 2017, AstraZeneca's stock effectively went nowhere. But over the past five years, things have changed. The company is focusing on fast-growing therapeutic areas and has made an astute acquisition that should fuel growth throughout the decade.
Before digging into the specifics of AstraZeneca's operating shift, it's important to recognize the safety in numbers provided by pharmaceutical stocks. If economic growth were to slow in the U.S., U.K, or elsewhere, it doesn't change the fact that people will continue needing prescription medicines. Since we don't have the luxury of deciding when we become ill or what ailment(s) we develop, cash flow for pharmaceutical stocks tends to be consistent in any environment.
With that being said, oncology and cardiovascular are the areas of focus that are really delivering for AstraZeneca and its shareholders. Excluding currency movements, oncology and cardiovascular net sales jumped 19% and 22%, respectively, in the latest quarter, and can continue to grow by a double-digit percentage for the foreseeable future.
AstraZeneca's quartet of cancer-drug blockbusters (Tagrisso, Imfinzi, Lynparza, and Calquence) delivered double-digit, constant-currency sales growth in the March-ended quarter, while next-generation type 2 diabetes drug Farxiga is on pace to top $5 billion in annual sales this year.
In terms of acquisitions, AstraZeneca made a splash when it purchased Alexion Pharmaceuticals in July 2021. Alexion is an ultrarare-disease drug developer. Though targeting therapies at a very small pool of patients has its risks, the reward for a successful clinical trial and regulatory approval is minimal-to-no competition and little pushback on list prices from health insurance companies.
To build on the above, prior to being acquired by AstraZeneca, Alexion had developed a next-gen treatment to replace its blockbuster drug Soliris. This therapy, known as Ultomiris, can be administered less frequently than Soliris and will allow AstraZeneca to protect Alexion's cash flow from generic and/or biosimilar competition for a long time to come.
Among big pharma stocks, AstraZeneca is the standout that can shine.
Image source: Getty Images.
Intel
The third Nasdaq 100 stock that represents a surefire buy in June is none other than semiconductor giant Intel (INTC 0.64%).
Let's not beat around the bush: Intel's Q1 report was a Halloween horror show for its shareholders. The company's $2.76 billion net loss was its largest in the company's storied history. A steep drop-off in personal computing (PC) sales, coupled with tepid demand from businesses in the company's data-center segment, led to a 36% year-over-year decline in sales. But despite chip stocks being cyclical, now looks like the perfect time to pounce on a downtrodden industry leader.
One thing I haven't mentioned yet that also holds true for Sirius XM is the disparity in length between expanding and contracting economic growth. Although economic downturns are inevitable, all 12 recessions after World War II were over in two-to-18 months. By comparison, economic expansions have gone on, in some instances, for more than 10 years. Cyclical semiconductor stocks like Intel benefit from this disparity.
One of the continued keys to Intel's success is the company's dominance in central processing units (CPUs). Has Intel lost some of its PC, mobile, and data-center share to rival Advanced Micro Devices (AMD) in recent years? Yes. But even with these losses, Intel maintains a mammoth lead in market share over AMD in these core categories. The story hasn't changed that PCs, mobile, and data centers are cash-flow drivers for Intel.
What is changing is Intel's focus on its foundry segment. It's in the process of acquiring Tower Semiconductor and is spending an aggregate of $20 billion to open two chip fab plants in Ohio, which should begin production sometime next year. Becoming a key domestic supplier could allow Intel to grow into the No. 2 foundry-services company by the end of the decade.
Furthermore, enterprise cloud spending is still in its early stages. Intel CEO Pat Gelsinger is confident that Intel's data-center business is going to thrive, especially with the company introducing artificial intelligence-driven chips of its own.
Relative to its book value, Intel is historically cheap. While turnarounds in the semiconductor space usually take some time, it's worth the wait for such a dominant company.
