When it comes to scouting potential high-growth opportunities, Nasdaq stocks often stand out as a top pick for many investors. Renowned for listing some of the most cutting-edge companies globally, the allure of significant returns is hard to ignore for those willing to tap into this innovation-driven marketplace.
Yet, the recent market headwinds have posed challenges. A broader shift away from risk has seen many of these promising innovators take a hit, with their valuations receding from their once-lofty highs. However, this downturn, rather than a cause for alarm, may offer astute investors a chance to capitalize on discounted opportunities.
It’s crucial to approach with caution, remembering that stock market investments always come with inherent risks. Yet, some signals suggest Wall Street may be overlooking the potential of certain Nasdaq stocks, a potential oversight that savvy investors could leverage to their advantage.
For those willing to embrace the uncertainty and see the potential amidst the chaos, there are Nasdaq stocks to buy that could offer promising returns.
Freshpet (FRPT)
To be quite blunt, you don’t need to look too far to find concerns associated with Freshpet (NASDAQ:FRPT). For one thing, the pet food specialist suffered a loss of more than 12% in the trailing five sessions. As well, investment data aggregator Gurufocus warns that four severe red flags dog the enterprise. Among them, fading long-term operating margins represents a serious headwind.
At the same time, it’s also interesting that insiders appear surprisingly bullish on FRPT, possibly making it a candidate for Nasdaq stocks to buy. Specifically, on Aug. 24, Freshpet Director Walter N. George bought 1,000 shares of FRPT.
Another noteworthy element of Freshpet’s contrarian bullish argument centers on its implied volatility (IV) curve. Providing a sort of weather forecast for anticipated activity at various strike prices, options traders seem to anticipate robust upside. Notably, IV rises from 41% at the $57.50 strike to 107% at the $120 strike. In fairness, traders are also hedging for significant downside risk, as evidenced by the IV of 145% at the $35 strike. Still, analysts peg FRPT a strong buy with a $92 price target, implying over 45% upside.
Dave & Buster’s Entertainment (PLAY)
An American restaurant and entertainment business, Dave & Buster’s Entertainment (NASDAQ:PLAY) has long been a happy hour establishment during the pre-pandemic days. However, Covid-19 and the thrust to remote operations has obviously impacted the business. Since the start of the year, PLAY has gained just under 1%. And in the trailing month, it’s down almost 9%.
Nevertheless, Dave & Buster’s could be one of the Nasdaq stocks to buy because of the shift in post-pandemic workplace norms. Increasingly, major corporations are starting to get aggressive about their return-to-office mandates. Push comes to shove, employers generally win these types of disputes, so that could cynically help PLAY stock.
Also, the IV curve for PLAY options is quite telling. IV jumps from 36% at the $40 strike to 87% at $65, possibly indicating heightened anticipation of upside. Also, while traders are mitigating for tail risk, the IV for far out-of-money (OTM) puts peaks at 76%. Lastly, analysts peg PLAY a strong buy with a $53.43 target implying over 49% growth.
Avis Budget (CAR)
If you believe in the revenge travel phenomenon, then Avis Budget (NASDAQ:CAR) could be your best wager for Nasdaq stocks to buy now. While the sentiment to hit the road or to fly the friendly skies obviously hit a peak in 2022 as domestic and international restrictions faded, the motivation still runs strong this year. The question is, how long will it last?
To be 100% clear, no guarantees exist for CAR stock. While shares gained about 10% since the January opener, they suffered a significant hit recently. In the trailing five sessions, CAR slipped more than 7%. And in the past 30 days, the security gave up almost 20% of equity value.
On the positive side, IV noticeably rises from 41% at the $207.50 strike to 122% at the $340 strike. On the flip side, while traders are hedging for downside risk, the peak IV for OTM puts stands at only 83%. Overall, analysts peg CAR a strong buy with a $271.75 price target, implying over 50% upside potential.
On the date of publication, Josh Enomoto 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.
