7 Must-Buy Nasdaq Stocks to Kick Off the First Quarter

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  • With the macro picture improving and growth stocks rebounding so far this year, medium-term and long-term investors should look for excellent Nasdaq stocks to buy.
  • Plug Power (PLUG): The company is going to get a big lift from tremendous demand for green hydrogen.
  • Bionano (BNGO): BNGO’s preliminary Q4 results proved the skeptics wrong.
  • Super Micro (SMCI): SMCI is growing at breakneck speed, but its valuation is low.
  • Shoals (SHLS): SHLS is extremely well-positioned to benefit from the proliferation of solar energy.
  • Rivian (RIVN): With Amazon’s (NASDAQ:AMZN) backing and strong reviews of Rivian’s EVs, RIVN stock is poised to jump.
  • InMode (INMD):  The reopening of economies and INM’s strong preliminary Q4 results make INMD stock a buy at its current, low valuation.
  • NXP Semiconductors (NXPI):  With its favorable focus on automotives and indistrials, along with a low valuation, NXPI should climb in the medium term and the long term.
Nasdaq stocks to buy - 7 Must-Buy Nasdaq Stocks to Kick Off the First Quarter

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With the Nasdaq Composite having risen a robust 6% in the first two weeks of the New Year, it appears that the exchange, in line with my previous predictions, is well on its way to entering a bull market. Further, recent developments, including strong holiday-season retail sales growth and a month-over-month drop in December’s Consumer Price Index, indicate that the Street’s fears about the macro environment last year were tremendously overdone. Also worth noting is that, with institutional investors now apparently internalizing that the Fed’s rate hikes aren’t going to go on forever or create a credit crisis, many growth stocks have been catching a bid this month. Given these points, it’s a great time for medium-term and long-term investors to find excellent Nasdaq stocks to buy.

Because of their very strong outlooks and exceptionally powerful catalysts, these seven Nasdaq names qualify as “must-buy” stocks at this point.

Ticker Company Price
PLUG Plug Power $16.83
BNGO Bionano $1.95
SMCI Super Micro Computer $84.83
SHLS Shoals Technologies $28.04
RIVN Rivian Automotive $16.93
INMD InMode $35.28
NXPI NXP Semiconductors $170.33

Plug Power (PLUG)

Plug Power logo on computer screen. PLUG stock.
Source: Postmodern Studio / Shutterstock

After Congress passed a tax credit for green hydrogen of up to $3 per kilogram, sales of the fuel look likely to soar. Since the tax credit took effect starting Jan. 1, the demand for fuel is also likely to jump. Plug Power, which is building four green hydrogen plants in the U.S., plus another in Belgium, will be a huge beneficiary of the adoption of green hydrogen. In addition, PLUG is also marketing electrolyzers that other companies can use.

Data strongly indicates that many other companies will buy Plug Power’s green hydrogen as quickly as the firm can make the fuel. Additionally, my calculations suggest that the business will be very profitable for PLUG once it starts producing and selling large volumes of green hydrogen by the end of this year.

Specifically, green hydrogen can now be produced for $3.70 per kilogram, and PLUG plans to sell its green hydrogen for about $6 per kilogram. That’s a rather high gross margin for Plug Power.

With the $3 per kilogram tax credit, that would drop to an effective price of $3 per kilogram. And while hydrogen made using natural gas, known as grey hydrogen, now costs only $1.50 per kilogram, in September, when natural gas prices were much higher, such hydrogen costed $3.30 per kilogram.

Unlike grey hydrogen, whose prices could fluctuate in all directions, green hydrogen prices are expected to head in one direction: down. Thus, for a lower price than the grey hydrogen of several months ago, companies can get superior certainty and superior public relations of green hydrogen.

And consulting firm Wood McKenzie expects “The global hydrogen market…to more than triple by 2050, with green hydrogen accounting for nearly all of that growth,” The Wall Street Journal recently noted.

Bionano (BNGO)

Bionano Genomics (BNGO) company logo on a website with blurry stock market developments in the background
Source: Dennis Diatel / Shutterstock.com

In a development that appears to have been little noticed by the financial-news media, Bionano (NASDAQ:BNGO) recently released data that effectively refuted bears’ key points about the company and BNGO stock, making it among the best Nasdaq stocks to buy.

Specifically, the company reported preliminary fourth-quarter results and disclosed that the number of flowcells it sold last quarter had soared 49% year-over-year to 4,781. Bionano sells its flow cells — which are utilized each time that the company’s optical DNA mapping system, Saphyr, is used — to its customers that have purchased Saphyr machines. Last quarter, the number of flowcells that it sold jumped 20% versus the previous quarter, growing at a rapid annual rate of 80%.

In October, a central contention of Seeking Alpha columnist Harrier Capital, which was shorting BNGO stock due to Bionano’s relatively low gross margins. However, as the sales of Bionano’s flowcells surge, its gross margins should jump, as the components of large machines tend to carry much higher gross margins than the machines themselves.

Furthermore, in an August 2022 column, another Seeking Alpha columnist who was bearish on BNGO stock, Bashar Issa, wrote that “Data show that labs have been using Saphyr less.” The Q4 flowcells data shows that the latter situation has changed.

In line with my previous thesis on BNGO stock, I believe that the utilization of BNGO stock is jumping because Medicare has agreed to reimburse labs for utilizing Saphyr in certain situations. As other insurers follow suit, Bionano’s financial results should surge dramatically, lifting BNGO stock tremendously.

Super Micro Computer (SMCI)

network server room with computers for digital tv ip communications and internet,3d rendering. Tech stocks
Source: Connect world / Shutterstock.com

A maker of servers and storage products, Super Micro (NASDAQ:SMCI) offers exceptionally low-cost, low-power solutions that are “personalized” to the needs of its customers and extensively utilize artificial intelligence, edge computing, and 5G technologies. Data centers, which are proliferating very quickly, are among its largest source of revenue.

Although 2022 was disastrous for most tech stocks, SMCI has jumped 77% over the past year. And in its fiscal year that ended in June 2022, its net sales came in at $5.2 billion, up from $3.56 billion during its previous fiscal year. Moreover, the company’s earnings per share more than doubled to $5.32 in FY22 from $2.09 in FY21.

And in its first quarter that ended in September, its sales soared 79% year-over-year, while its EPS, excluding certain items, soared an incredible 490% YOY to $3.42. Clearly, the demand for SMCI’s products is rapidly growing, causing its top and bottom lines to jump at tremendous rates.

Yet despite all of SMCI’s strengths, the forward price-earnings ratio of SMCI stock is an affordable 8.90.

Shoals Technologies (SHLS)

solar and wind power in coastal saline and alkaline land, develop shoals background representing solar stocks.
Source: chuyuss / Shutterstock.com

As I’ve written in past columns, Shoals (NASDAQ:SHLS) — a maker of more affordable, easy-to-use solar-energy equipment than competing companies — is extremely well-positioned to benefit from the high-speed proliferation of solar energy going forward.

Illustrating how quickly solar is poised to grow in the coming years, Global X ETFs predicts that the power source will generate more than 50% of the world’s electricity increases between 2022 and 2032. And the firm believes that solar’s share of world electricity generation will more than triple to 11% during that span.

Last month, JPMorgan named SHLS stock as one of its three top picks in the alternative energy sector. Further, the firm expects solar stocks focused on serving utilities to outperform those serving consumers and businesses this year. Shoals get most of its revenue from utilities.

The PEG ratio of SHLS is a very attractive 0.65.

Rivian Automotive (RIVN)

Rivian (RIVN) is new electric vehicle shown at the New York International Auto Show 2019, at the Jacob Javits Center. This was Press Preview Day One of NYIAS
Source: Miro Vrlik Photography / Shutterstock.com

With the backing of Amazon and benefiting from extremely favorable reviews of its R1T electric truck, Rivian is extremely well-positioned to succeed over the medium term and the long term.

The automaker has already successfully produced and delivered over 1,000 of the 100,000 of its delivery vans ordered by Amazon (NASDAQ:AMZN), which has also invested over $1.3 billion in RIVN, significantly incentivizing the e-commerce giant to help Rivian succeed. Moreover, Amazon’s drivers reportedly like Rivian’s vans, as Julietta Dennis, who employs dozens of Amazon drivers, told CNBC that her drivers prefer Rivian’s vans to their previous vehicles.

Morgan Stanley is reportedly “cautiously optimistic” about RIVN stock going forward. Analyst Adam Jonas wrote that ” RIVN managed to increase both production and deliveries [every quarter] throughout the year, with 4Q deliveries over 550% higher than that of 1Q. We expect to see RIVN continue to scale production next year, and maintain our FY23 delivery estimate of 50k vehicles.”

Lastly, expressing his admiration for Rivian’s EVs, Jonas added that the company has a unique niche in the commercial EV space. He maintained a $55 price target and an “overweight” rating on the shares.

InMode (INMD)

An image of one large person with three smaller doctors around them; magnifying glass, medicine, syringe
Source: VectorMine/Shutterstock

As I’ve noted in a number of past columns, InMode, which specializes in developing non-invasive products that enable doctors to enhance patients’ appearance, is well-positioned to benefit from the relaunch of travel and public events following the pandemic.

Validating my thesis, the company on Jan. 11 reported that it expected its fourth-quarter revenue to come in at $133.2 million to $133.4 million, well above analysts’ average estimate at the time of  $129.45 million. In Q4 of 2021, InMode’s top line was $110.5 million.

Moreover, for all of last year, the company estimated that its earnings per share, excluding certain items, would be about $2.39. That means InMode’s trailing price-earnings ratio is just 13.7., which is very low for a company like InMode, whose top and bottom lines are expanding very quickly.

In a note to investors on Jan. 12, investment bank Canaccord wrote that INMD has one of the most favorable risk/reward ratios in the medical technology sector. The firm kept a $47 price target and a “buy” rating on the shares.

Analysts, on average, have a $50 price target on INMD, which makes it among the top Nasdaq stocks to buy.

NXP Semiconductors (NXPI)

A sign on a brick well for NXP Semiconductor. NXPI stock.
Source: Lukassek / Shutterstock.com

In a few past columns, I’ve recommended NXP Semiconductors (NASDAQ:NXPI), citing the company’s focus ” on making chips used by industrial companies and automakers.” Arguing that the chip makers’ “relatively low reliance on consumer-end markets” would leave it well-positioned as consumers focus on spending their disposable income on experiences, I have also called the valuation of NXPI stock very attractive.

In recent weeks, it appears that the Street is beginning to share my bullishness on NXP Semiconductors.

For example, Wells Fargo recently expressed optimism about NXPI stock, while UBS upgraded the shares to “neutral” from “sell.” The latter firm noted that NXP had generated strong cash flow over the past decade, and it expects that trend to continue for the foreseeable future. It also predicts that the company’s free cash flow margins will remain about three percentage points higher than the sector average.

NXPI stock has a very low forward price-earnings ratio of 13 times, making it among the best Nasdaq stocks to buy.

On the date of publication, Larry Ramer held long positions in PLUG, SHLS, BNGO,RIVN, and INMD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.


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