The growth and tech-heavy Nasdaq 100 index is in something of a significant correction at the moment.
After hitting new all-time highs early in July, the benchmark Invesco QQQ ETF (NASDAQ:QQQ) has already pulled back close to 10% from its recent peak.
There are several reasons for this. Several key tech leaders, such as Amazon (NASDAQ:AMZN), posted disappointing earnings results. The momentum has turned to the downside in the all-important semiconductor sector. And investors appear to be worried about recent geopolitical developments, which could augur poorly for economic growth.
While the overall index finds itself on shaky footing heading into this fall, there are Nasdaq stocks performing well under the surface with further upside ahead. These are three of the Nasdaq stocks to watch.
PayPal Holdings (PYPL)
Many investors have written off PayPal Holdings (NASDAQ:PYPL). PYPL stock collapsed over the past two years as the e-commerce-driven boom seemingly turned into a bust. With momentum in the space drying up, PayPal shares lost as much as 80% of their peak valuation.
In theory, the slowing adoption of digital shopping and services, combined with high levels of competition in the fintech space, could have crushed PayPal. But the underlying business is still humming along. It grew revenues from $25.3 billion in 2021 to $27.5 billion in 2022 and $29.8 billion in 2023.
This year is set to be another record-maker, with revenues forecast to rise more than 7% overall to about $32 billion. The company’s most recent earnings result easily topped expectations, with revenues jumping 8%, powered by 11% growth in total payments volume.
PayPal is buying back stock aggressively at its current low prices, which should generate substantial shareholder value over time. The stock is still on offer at less than 15 times forward earnings today.
Automatic Data Processing (ADP)
Automatic Data Processing (NASDAQ:ADP) is one of the giants in the payroll processing and human resources management space.
The company recently topped the $100 billion market capitalization threshold and appears likely to surpass its all-time high stock price — set back in 2022 — in the near future.
Despite uncertainty in other parts of the economy, employment remains quite strong, which powers demand for ADP’s services.
Automatic Data Processing recently delivered earnings well above expectations while laying out upbeat fiscal year 2025 guidance, which includes an estimate for 9% earnings growth. All this to say that while other parts of the Nasdaq ecosystem are suffering from slowdown worries at the moment, this employment services giant should keep steadily rolling along to new heights.
Gilead Sciences (GILD)
The beleaguered Gilead Sciences (NASDAQ:GILD) may be set for a comeback.
The company rose to prominence a decade ago with its blockbuster drugs that cure the hepatitis C virus. While the company initially faced controversy for its highly-priced cure, it counterintuitively left Gilead in a challenging spot. The company brought in record profits as it sold a great deal of this product. But, as the patient population rapidly decreased in size, Gilead’s revenues subsequently collapsed.
Gilead was left with tons of cash from that product cycle and has been looking for the next big opportunity. That appears to be in oncology, where Gilead has made several key acquisitions in recent years. Its cancer drugs also pair well with the company’s continuing leadership in the HIV treatments space.
GILD stock has rallied after recent upbeat earnings as its turnaround gains momentum. Even so, Morningstar’s Karen Andersen believes shares remain at a more than 20% discount to fair value today.
On the date of publication, Ian Bezek held a long position in GILD stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
