It’s been a rough ride to the market lately. The Nasdaq Composite (NASDAQINDEX: ^ IXIC) It is currently 20% below the late-March high, and down nearly 30% from the November peak. And of course, the past few weeks have been much worse for some of the stocks listed on the Nasdaq.
If you thought that many of these hot-selling names are now too low to miss, you’re right. Here’s a closer look at three of the hardest-hit Nasdaq stocks that could be near the bottom, ready to bounce back.
octa (NASDAQ: OKTA) It is a cyber security device. The company offers a way to ensure that only authorized users log into the network, whether they are employees or corporate customers.
Such services were needed before the spread of the Corona virus, but when millions of people began working from home during the pandemic, the need for such security measures has ballooned. It’s still swollen. Okta’s revenue is expected to grow 37% this fiscal year, and nearly 34% next year. Although next year’s growth remains unprofitable, it should account for a large portion of that loss, with profits in mind for the foreseeable future.
This pace of progress has not impressed investors lately. The stock is down 66% since November, hitting a 52-week low earlier this month.
However, Octa’s leadership of a large-scale sale from the tech sector appears to be rooted in the misconception. This is the assumption that as the coronavirus pandemic recedes, secure logins will also be required. You won’t. If anything, it’s still growing. At Arkose Labs’ 2021 fraud case peport, a digital fraud prevention device noted a 70% increase in fake new account registrations early last year, adding that so-called “credential stuffing” accounts for 29% of all cyberattacks monitored.
To this end, Mordor Intelligence estimates that the digital authentication management market will grow at an average annual rate of 22% from 2018 to 2026. Okta has already proven that it can win more than its fair share of this market growth.
If you want proof that even the most beloved stock in the market can sometimes crash, chew on this: Amazon (NASDAQ: AMZN) Shares are now priced 35% below their March high, and are more than 40% off their November peak.
surprised? do not be. The high prices seen since the middle of last year are not just annoying. Higher fuel costs, material costs and labor costs can be an outright problem for a company like Amazon, which despite its size operates on slim profit margins. As CFO Brian Olsavsky made a point during the company’s conference given the disappointing first-quarter results, “[T]The cost of fuel is almost one and a half times higher than it was a year ago. Combined with annual increases in wage inflation, these inflationary pressures have added nearly $2 billion in additional costs compared to last year.”
From a perspective perspective, the company generated operating income of $3.7 billion for the relevant quarter, down more than half from the prior year comparison despite increased revenue. Furthermore, the only profitable venture that Amazon ran in the last quarter was cloud computing company Amazon Web Services. Its consumer-facing online retail operation has already lost money for a three-month period ending in March.
Why enter the stock market now? Because it’s Amazon. It has been here before, and it has been modified as needed. I will do it again. As CEO Andy Gacy noted in his first quarter report: “Today, because we no longer chase physical capabilities or employees, our teams are focused squarely on improving productivity and cost effectiveness across our fulfillment network.”
Finally, add Adobe (NASDAQ: ADBE) To the list of mediocre Nasdaq stocks ready to bounce back.
Most computer users will recognize Adobe as the name behind the pdf (Portable Document File) file type that made it possible to deliver easy-to-print documents across the web. Seasoned investors may remember that Adobe was also a huge leader in the creation and management of digital images and the market for optimization software through a program called Photoshop. While there are plenty of alternatives out there today, Photoshop still exists as well, as the pdf file.
However, what most investors may not realize is that Adobe is so much more than Photoshop and pdf files these days. It offers complete platforms that help enterprise level clients create and improve websites and online advertising campaigns, and yes, create digital images and photos. The site called Experience Cloud enables its customers to not only manage and promote an e-commerce site, but also collect and analyze data regarding its users and traffic. It can help enterprise users change the look and feel of the website to suit different visitors.
The other tool, Creative Cloud, is a digital image creation and optimization tool that can do more with an image than most people thought possible. There is nothing else like either of the two shows. Even in a tough economy, customers simply cannot give up access to these tools.
These platforms are largely rented out rather than sold outright, and made available as a cloud-based application rather than downloaded software. The end result is an increased degree of recurring revenue. However, the shift in the company’s business model is not impeding growth. Analysts expect to see sales growth accelerate 13% this year to nearly 15% next year, with similar earnings growth in the cards.
Given that kind of continued forward progression, the stock’s 44% drop since November is an opportunity to plug it into a competitive price.
10 stocks we like better than Amazon
When our award-winning analyst team has stock advice, they can pay to listen. After all, the newsletter they’ve been running for over a decade, Motley Fool Stock AdvisorThe market tripled. *
They just revealed what they think are the ten best stocks investors can buy right now…and Amazon wasn’t one of them! That’s right – they think these 10 stocks are the best buys.
*Stock Advisor returns as of April 7, 2022
John Mackie, CEO of Whole Foods Market, an Amazon company, is a member of The Motley Fool’s Board of Directors. James Bromley has no position in any of the listed stocks. Motley Fool has positions at Adobe Inc. and Amazon and Okta recommend it. Motley Fool recommends the following options: Long January 2024 calls worth $420 on Adobe Inc. and short Jan 2024 calls worth $430 on Adobe Inc.. Motley Fool has a disclosure policy.