While stocks generally have taken it on the chin in 2022, there’s a bunch of Nasdaq stocks trading at a discount.
For example, the Nasdaq 100 Index is down 26.5% through Jul. 8. The same goes for the entire Nasdaq Composite Index. Even the Dow Jones Industrial Average is off more than 14%.
It is hard to jump into stocks at a time when the Nasdaq Composite just delivered its worst first six months of a calendar year on record. This is not a falling knife you want to catch. Macroeconomics has become a popular subject for market pundits and analysts. I don’t think many of the issues are going to go away anytime soon.
However, if you can look beyond the next six months, these seven Nasdaq stocks trading at a discount should deliver a healthy rebound in 2023 and beyond.
|NXST||Nexstar Media Group, Inc.||$165.14|
|EXPE||Expedia Group, Inc.||$90.27|
|PDCE||PDC Energy, Inc.||$54.31|
|WSC||WillScot Mobile Mini Holdings Corp.||$32.24|
Nasdaq Stocks Trading at a Discount: Steel Dynamics (STLD)
Steel Dynamics (NASDAQ:STLD) has had quite a rollercoaster ride in 2022. Its high-and-low spread is more than $50, with a high of $100.37 in April and a $50.54 low in January. From its April high, it has lost 34.1% of its value.
Steel Dynamics is one of the largest and most profitable steel producers in the U.S. It is currently investing $2 billion in building a new flat roll steel mill in Texas. The mill will enable it to have a leading position in electric-arc furnace steelmaking in America. The mill increases its steel production capacity by more than 25%. Approximately 70% of its production is targeted at the Mexican market.
In mid-June, Steel Dynamics guided for the second quarter (Q2). It expects earnings per share (EPS) of $6.63 at the midpoint of its guidance. That’s 10.1% higher than Q1 2022.
In the trailing 12 months ended Mar. 31, Steel Dynamic’s free cash flow (FCF) was $1.91 billion, giving it an FCF yield of 15.3%.
Nexstar Media Group (NXST)
Nexstar Media Group (NASDAQ:NXST) is the largest owner of television stations in the U.S. It has 199 broadcast stations in 116 markets, broadcasting to 68% of all U.S. households with televisions.
News reports at the end of June suggested that the company’s pursuit of broadcast network CW appears to be nearing the finish line. Nexstar would own 75% of CW, while Paramount Global (NASDAQ:PARA) and Warner Bros. Discovery (NASDAQ:WBD) would each own 12.5%. CW was created in 2006 when UPN merged with the WB as a 50/50 venture between Paramount and Warner Bros.
In the past five years, Nexstar has grown its revenue by 91.4% from $2.43 billion in 2017 to $4.65 billion in 2021. Over the same period, its operating profit jumped 133.4% to $1.18 billion from $505.63 million in 2017.
In terms of Nexstar’s performance in 2022, NXST stock is up 8.5% YTD, considerably higher than the Nasdaq Composite. That said, its earnings yield is 12.25%, 212 basis points higher than the company’s five-year average. In addition, its forward price-to-earnings (P/E) ratio is 7.42, which is 349 basis points less than its five-year average.
Obtaining majority control of the CW will give it a higher profile. That should bring more investors to NXST stock.
Nasdaq Stocks Trading at a Discount: Expedia Group (EXPE)
Despite Expedia Group’s (NASDAQ:EXPE) more than 50% decline in 2022, if you acquired shares in the online travel company during the March 2020 correction, you would still be up 88% over 27 months.
The latest drag on Expedia’s share price is the massive number of cancellations by airlines struggling to cope with surging travel demand and a labor shortage. EXPE stock fell 26.6% in June. In addition, investors are concerned that the pent-up demand for travel will slow as recession fears continue to be a possibility.
The reality is that Expedia’s various travel brands: Expedia, Hotels.com, Vrbo, Travelocity, Hotwire, etc., provide travelers with a single technology platform to book hotels, vacation rentals, flights, car rentals, cruises, and activities while traveling.
The global travel market is estimated to be $1.5 trillion annually. Expedia continues to transform its business to grab a more significant piece of this global market.
In May, the company launched the Expedia Group Open World Technology Platform to help all of its travel partners be successful.
Expedia’s business is close to being back to pre-pandemic levels. Yet, its shares are valued at considerably less than their five-year average. Its price-to-sales ratio is 1.51, 36% less than its five-year average, while its forward P/E is 14.45, which is 63% less.
PDC Energy (PDCE)
You might find it odd that I’d include an oil and gas company such as PDC Energy (NASDAQ:PDCE) in my list of seven Nasdaq stocks trading at a discount. However, the company’s shares haven’t done much in 2022 — up 11.7% YTD compared to 34.7% for Exxon Mobil (NYSE:XOM) — despite generating $1.02 billion in trailing 12 months FCF through Mar. 31.
PDC operates in the Wattenberg Field in Colorado, amounting to 86% of annual production, and the Delaware Basin in West Texas, amounting to 14% of its production. In 2022, it expects to produce between 235,000 barrels of oil equivalent per day and 250,000. Approximately 33% of that is oil, with the rest being either natural gas or natural gas liquids (NGLs).
Over the past six quarters through Q2 2022, it will have generated $1.7 billion FCF. It expects to generate more than that in 2022 and 2023. Its goal is to return at least 60% of its FCF to shareholders for dividends and share repurchases.
PDC Energy has a current FCF yield of 17.6%. In 2014, the last time oil prices were above $100, PDCE stock traded at 6.24x cash flow, almost double its current valuation. It deserves to go on a run.
Nasdaq Stocks Trading at a Discount: Hologic (HOLX)
Hologic (NASDAQ:HOLX) is a medical devices company that focuses on the healthcare needs of women. It controls 65% of the U.S. digital mammography market and is an innovator in digital mammography.
The company’s diagnostic business has grown significantly in the past two years due to its Covid-19 assay sales. In the first quarter, it had Covid-19 assay revenue of $584.1 million. Including other Covid-19-related revenue, its Q2 2022 Covid-19 revenue was $696.7 million, down slightly from $782 million in Q2 2021.
For all of 2022, it expects revenue of at least $4.6 billion, $200 million higher than its previous guidance. On the bottom line, its outlook calls for non-GAAP EPS of $5.55 at the midpoint of its guidance, 50 cents higher than its previous projection.
Of the 17 analysts covering HOLX stock, eight have it as a “buy,” two rate it “overweight,” and seven have it as “hold” with a median target price of $80.50.
As a company focused on women’s health, it is naturally concerned about what’s happening due to Roe v. Wade being overturned by the Supreme Court. Like many companies, it will reimburse employees who must travel for abortion services out of state.
If you believe in a woman’s right to choose, Hologic is an investment and company you should be able to get behind.
WillScot Mobile Mini Holdings (WSC)
On Jul. 1, 2020, WillScot Corporation and Mobile Mini Inc. merged to form WillScot Mobile Mini Holdings (NASDAQ:WSC), a leading provider of modular space and portable storage solutions in the U.S., U.K., Canada, and Mexico. Mobile Mini shareholders got 2.4050 shares of WillScot Class A common stock for every share held.
The company is the number one competitor in the North American marketplace for modular space and portable storage solutions. The marketplace is estimated to be more than $10 billion annually.
It expects to achieve an FCF margin between 20% and 30% over the next 3 to 5 years, amounting to $650 million in annual FCF. Currently, its trailing 12 month FCF margin is nearly 11%, or $210 million. However, with more than 85,000 customers worldwide, it’s bound to get there sooner rather than later.
The company’s three biggest end markets are Non-Residential & Golf Courses with 14% of revenue, Professional Services with 13%, and Subcontractors and Retail & Wholesale Trade tied at 11%.
Over the next five years, it expects to return approximately $2.5 billion to $3 billion in dividends and share repurchases. It has grown its return on invested capital from 4.6% in 2018 to 12% in the trailing 12 months ended Q1 2022.
The average target price of the 11 analysts covering its stock is $47. Nine of the 11 analysts rate it a “buy.”
Nasdaq Stocks Trading at a Discount: Flex (FLEX)
Flex (NASDAQ:FLEX) started in Silicon Valley in 1969. Back then, it was known as Flextronics. In 1981, it started contract manufacturing for PCs and other electronic devices. It went public in 1987. In 2015, it changed its name to Flex to reflect the diverse nature of its manufacturing capabilities.
In early May, the company reported its Q4 2022 and full-year results. Flex had annual sales of $26 billion, 7.9% higher than a year earlier. In fiscal 2023, it expects top-line sales of $28.2 billion at the midpoint of its guidance.
On the bottom line, its 2022 full-year adjusted net income was $945 million, 18.9% higher than a year earlier. For 2023, it expects adjusted EPS of at least $2.09, 6.6% higher than $1.96 in 2022.
The company has three operating segments: Flex Agility Solutions, which includes communications infrastructure, appliances, consumer packaging, mobile consumer devices, and others; Flex Reliability Solutions, which includes smart technologies, medical devices, industrial devices, renewables, and others; and Nextracker, a provider of solar trackers.
In February, Flex sold $500 million in stock of its solar subsidiary. The company paid $330 million for Nextracker in 2015. The stock sale valued Nextracker at $3 billion, or almost 46% of its current market cap.
Trading at just 0.27x sales, Nextracker makes its current share price — down 22.6% YTD — very intriguing.
On the date of publication, Will Ashworth 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.