3 humiliated Nasdaq shares ready to return | Smart change: Personal finance

3 humiliated Nasdaq shares ready to return |  Smart change: Personal finance

(James Brumley)

It was a tough test for the late market. What do you have Nasdaq composite (NASDAQINDEX: ^ IXIC) It is currently more than 20% below the high at the end of March and is down almost 30% from the November peak. And, of course, for some stocks listed on the Nasdaq, the last few weeks have been much, much worse.

If you think that many of these severely sold names are now priced too low to pass, you’re right. Here’s a closer look at three of Nasdaq’s most downtrodden stocks, which could be close to a minimum and are ready to return.

Octave

Octave (NASDAQ: OKTA) it’s a cyber security outfit. The company provides a way to ensure that only authorized users connect to a network, whether they are employees or customers of a company.

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Such services were needed before COVID-19 was installed, but as millions of people began working from home during the pandemic, the need for such security measures increased. And it still swells. Okta’s revenue is expected to increase by 37% this fiscal year and almost 34% next year. Although still unprofitable, next year’s growth should take a big bite out of this loss, given the profits in the foreseeable future.

This pace of progress has not impressed investors lately. The stock fell 66% in November, reaching new 52-week lows earlier this month.

Okta’s leadership of a large-scale sales in the technology sector, however, seems to be rooted in the wrong idea. This is the assumption that as the coronavirus pandemic subsides, secure authentication will also be required. It will not be. If anything, it’s still growing. In Arkose Labs 2021 Fraud status rThe report, the digital fraud prevention team noted a 70% increase in new fake account records at the beginning of last year, adding that the so-called “credit load” accounted for 29% of all cyber attacks it monitored. .

To that end, Mordor Intelligence estimates that the digital authentication management market will grow at an average annual rate of 22% from 2018 to 2026. Okta has already proven that it is more than capable of earning more than the fair share of this growth. of the market.

Amazon

If you want proof that even the most beloved stocks on the market are sometimes able to lose favor, chew this: Amazon (NASDAQ: AMZN) Shares are now 35% lower than the March high and down more than 40% from the November high.

Amazed? Do not be. The higher prices observed since the middle of last year are not only annoying. Higher fuel costs, material costs, and labor costs can be downright problematic for a company like Amazon, which, despite its size, operates with thin profit margins. And, as CFO Brian Olsavsky set out to explain during the company’s conference on the disappointing results of the first quarter, “[T]The cost of fuel is about one and a half times higher than it was a year ago. Combined with annual increases in wage inflation, these inflationary pressures have added incremental costs of about $ 2 billion compared to last year.

For the outlook, the company generated operating income of $ 3.7 billion for the quarter, down more than half compared to the previous year, despite higher revenues. Moreover, the only profitable business managed by Amazon in the last quarter was its cloud computing business, Amazon Web Services. Its consumer-oriented retail operation actually lost money for the three-month period that ended in March.

So why go into stock now? Because it’s Amazon. It has been here before and has been adjusted as needed. He will do it again. As CEO Andy Jassey noted in the first quarter report: “Today, as we no longer track physical or staffing, our teams are focused on improving productivity and cost-effectiveness across our entire delivery network.”

Adobe

Finally, add Adobe (NASDAQ: ADBE) to your list of humble Nasdaq stocks ready to return.

Most computer users will recognize Adobe as the name behind the pdf (portable document file) file type that made it easy to deliver documents for web printing. Veteran investors may remember that Adobe was also a pioneer in the software market for creating, managing, and enhancing digital images with a program called Photoshop. Although there are plenty of alternatives today, Photoshop is the same as the pdf file.

Image source: Getty Images.

What most investors may not realize, however, is that Adobe is much more than Photoshop and pdf files nowadays. Provides comprehensive platforms that help enterprise customers create and optimize websites and online advertising campaigns and, yes, take digital photos and images. The so-called Experience Cloud empowers its customers not only to manage and promote an e-commerce site, but also to collect and analyze data about users and its traffic. It can even help business users change the look and feel of a website to suit different visitors.

The other, Creative Cloud, is a digital image creation and enhancement tool that can do more with photography than most people have ever thought. There is nothing like any other offer. Even in a difficult economy, customers simply cannot give up access to these tools.

These platforms are mostly leased, rather than sold, and are available as a cloud-based application rather than as downloaded software. The end result is a growing degree of recurring income. However, changing the company’s business model does not limit growth. Analysts expect to see a 13% increase in sales this year to accelerate to a level of almost 15% next year, with a similar increase in card profit.

Given this steady progress, the 44% drop in shares in November is a chance to connect to it at a great price.

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John Mackey, CEO of Whole Foods Market, a subsidiary of Amazon, is a board member of The Motley Fool. James Brumley has no position in any of those actions. The Motley Fool has positions in and recommends Adobe Inc., Amazon and Okta. Motley Fool recommends the following options: $ 420 January 2024 long calls to Adobe Inc. and $ 430 short calls in January 2024 to Adobe Inc. The Motley Fool has a disclosure policy.

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