1 Nasdaq 100 Stock to Consider Right Now and 2 We Brush Off
While the Nasdaq 100 (^NDX) is filled with cutting-edge technology and consumer companies, not all are on solid footing. Some are dealing with declining demand, high costs, or regulatory pressures that could limit future upside.
Even among high-growth companies, some are struggling, which is why we built StockStory - to help you separate winners from losers. Keeping that in mind, here is one Nasdaq 100 stock that has huge potential and two that may struggle.
Two Stocks to Sell:
Texas Instruments (TXN)
Market Cap: $179.7 billion
Headquartered in Dallas, Texas since the 1950s, Texas Instruments (NASDAQ:TXN) is the world’s largest producer of analog semiconductors.
Why Are We Hesitant About TXN?
- Sales stagnated over the last two years and signal the need for new growth strategies
- Earnings per share fell by 1.8% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Free cash flow margin shrank by 19.6 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
At $198.61 per share, Texas Instruments trades at 31.6x forward P/E. Dive into our free research report to see why there are better opportunities than TXN.
Regeneron (REGN)
Market Cap: $78.5 billion
Founded by scientists who wanted to build a company where science could thrive, Regeneron Pharmaceuticals (NASDAQ:REGN) develops and commercializes medicines for serious diseases, with key products treating eye conditions, allergic diseases, cancer, and other disorders.
Why Are We Wary of REGN?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 4.6% for the last two years
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 26.8 percentage points
- Waning returns on capital imply its previous profit engines are losing steam
Regeneron’s stock price of $760.19 implies a valuation ratio of 17.4x forward P/E. Check out our free in-depth research report to learn more about why REGN doesn’t pass our bar.
One Stock to Watch:
Apple (AAPL)
Market Cap: $3.82 trillion
Creator of the iPhone and App Store, Apple (NASDAQ:AAPL) is a legendary developer of consumer electronics and software.
Why Should AAPL Be on Your Watchlist?
- Apple's revenue base is so large because nearly everyone in the U.S. has an iPhone, but this is a double-edged sword. Growth must now come from upgrades, a harder pitch that has resulted in sluggish top-line performance recently.
- Still, Apple's devices have endured for decades, speaking to its brand, design ethos, and technological chops. Its success is rare in the world of consumer electronics, which is fraught because of commoditization, competition, and obsolescence risk.
- The company may not have the best gross margin because of its hardware orientation, but it still manages to produce elite operating and free cash flow margins. This shows it doesn’t need over-the-top marketing campaigns to convince people to buy its products.
Apple is trading at $260.30 per share, or 30.5x forward price-to-earnings. Is now the time to initiate a position? Find out in our full research report, it’s free.
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