Inflation, interest rates, and recession fears have put pressure on stocks, but Nasdaq stocks in particular have been hardest hit. So far this year, the S&P 500 is down 18%. The Dow Jones Industrial Average is down 13%.
The Nasdaq, as measured by the Nasdaq composite? It’s down by a wider margin, 25.8% year-to-date. That’s not surprising, given the index is made up largely of richly priced tech stocks. Such names are most sensitive to rising interest rates, and negative changes in economic conditions.
As these issues carry on in the near term, names that trade on the Nasdaq could continue to struggle. Still, that’s not to say you should avoid them completely. Some high-quality tech names commonly associated with the index are now at appealing entry points.
Along with this, there are scores of non-tech names listed on the exchange that are promising long-term buy-and-hold opportunities. That brings us to these seven Nasdaq stocks. Each one could provide long-term investors buying them today with solid returns.
|DLTR||Dollar Tree, Inc.||$156|
|IEP||Icahn Enterprises L.P.||$51.27|
|MNST||Monster Beverage Corporation||$87.04|
|ORLY||O’Reilly Automotive, Inc.||$607.44|
Nasdaq Stocks: Dollar Tree (DLTR)
It’s an understatement to say investing in Dollar Tree (NASDAQ:DLTR) has been a roller-coaster ride for the past month. During May, shares in the discount retailer plunged, then fully bounced back, creating a profitable trade for investors who managed to buy the dip.
So, what happened with DLTR stock? Following bad earnings reports from Target (NYSE:TGT) and Walmart (NYSE:WMT), retailer stocks plunged across the board. Investors feared that other retailers would see their earnings materially affected by inflation’s impact on operating costs.
Yet in a matter of days, once it revealed its earnings report, showing operating margin improvement, and beating estimates, Dollar Tree zoomed back to prior levels. It’s well positioned to thrive in bad times, and it’s a solid performer during good times. This retailer will likely continue steadily increasing its revenues and earnings over time. Reasonably priced (earnings multiple of 19.8x), consider it a buy.
Alphabet (GOOG, GOOGL)
As I argued late last month, I wouldn’t expect a quick turnaround for shares in Google parent Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). Market conditions, plus uncertainty over future growth, could continue to impact the performance of this trillion-dollar FAANG component.
Yet frustrating as it may be to hold this stock in the short-term, buying it today could be a shrewd move. Trading for just 20.9x earnings, GOOG stock has fallen to a relatively low valuation. This is due to rising concerns that its days of elevated growth are over.
But are they? Faster-growing segments like its cloud computing business could make up for slowing growth with its main search business. Alphabet also has potential to further monetize its YouTube platform. With a high chance of making a recovery, in the event growth gets back into high gear, you may want to start accumulating shares in this high-quality tech stock.
Icahn Enterprises (IEP)
Icahn Enterprises (NASDAQ:IEP) is one of the more unique Nasdaq stocks. It’s an investment vehicle controlled by billionaire activist investor Carl Icahn. It’s also a master limited partnership (MLP). That means it’s a pass-through entity that pays out earnings in the form of distributions.
Even for an MLP, IEP stock pays out a big distribution. Its annual yield is a staggering 15.6%. There is a caveat. Its current distribution vastly exceeds its earnings. This is sustainable because Icahn (who owns 87% of it) takes his distributions in the form of new MLP units.
So, why own it? Icahn’s “permabear” attitude cost him (and IEP) billions during the 2010s. Yet Icahn’s investing style is coming back in vogue. His bearishness on growth stocks, and bullishness on sectors like energy, is no longer a contrarian position. IEP could deliver better returns, which could enable the stock to make a comeback.
Nasdaq Stocks: Monster Beverage (MNST)
After plunging from January through March, in recent months Monster Beverage (NASDAQ:MNST) has been on a tear. It’s soared from the low $70s per share, back up to around $91 per share. At first glance, shares in this energy drink maker may look pricey.
MNST stock today trades for around 35.9x earnings. Even so, it may be able to sustain this valuation, and continue to rise in price in line with its earnings. Morgan Stanley’s Dara Mohsenian recently called it a “top pick” in the beverage sector.
The analyst cited topline growth factors to back up the view. Favorable demographic trends, plus international expansion, could enable the beverage company to continue growing revenue and earnings at a double-digit pace. More value-minded investors may want to skip on it, or at least wait for weakness. Growth-focused investors, however, may want to consider buying this consumer staples growth stock.
O’Reilly Automotive (ORLY)
Like Monster Beverage, O’Reilly Automotive (NASDAQ:ORLY) may also make for a great long-term growth play. The factors that have enabled the auto parts retailer to report strong results lately could continue. That is, motorists may continue to opt to repair existing vehicles, rather than buy another new or used vehicle.
As Louis Navellier discussed back in March, today’s cars, trucks, and SUVs last longer than the vehicles of yesteryear. This makes repairing them more economical than replacing them. Especially as vehicle prices remain up by double digits. In turn, this points to further growth, and higher prices, for ORLY stock.
Despite these prospects, the market may still be under the impression growth will screech to a halt. At least, that’s the takeaway from its current forward multiple (19.3x). Although growth in the coming years may come more gradually than in 2021, this is more than reflected in today’s valuation.
PepsiCo (NASDAQ:PEP) is one of the few “old school” blue-chip Nasdaq stocks. Shares in the soft drink and snack foods giant are a great buy for investors looking to add steady, dividend-paying stocks to their portfolio.
Not only that, when it comes to owning Coca-Cola (NYSE:KO) stock versus PEP stock, you may want to go with the latter. Both have similar valuations and dividend yields. Each one has a forward P/E of around 25%, and pays out a dividend around 2.75%.
Yet PepsiCo wins out in two areas. First, earnings growth. Sell-side estimates call for it to see around 8.6% earnings growth, versus 6.9% for Coke. Second, it has also delivered higher dividend growth (7.39% per year) over the past five years, versus KO (3.66%). In the cola stock wars, this may be the winner by a nose.
Nasdaq Stocks: Starbucks (SBUX)
The growth stock sell-off hit Starbucks (NASDAQ:SBUX) shares particularly hard. It’s down around 35% year-to-date. Besides market conditions, other factors have hurt its performance.
As my InvestorPlace colleague Faizan Farooque recently discussed, SBUX stock has been impacted by several company-related developments. These include the latest pandemic slowdown in China and inflationary pressures. It’s also dealing with a unionization wave.
All this uncertainty may make you hesitant to buy in today. Yet this uncertainty may be what allows you to buy in at a favorable entry price. The stock currently trades for around 23x estimated earnings for fiscal year ending September 2023. It’s likely to recover once today’s troubles pass. In the meantime, you can get paid while you wait, with Starbucks’ 2.5% dividend yield. The coffee chain has raised an average of 15.1% per year over the past five years.
On the date of publication, Thomas Niel held a LONG position in IEP stock. He did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.