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5 Non-Tech Nasdaq Stocks to Buy Amid Index's Recent Bloodbath
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Wall Street has been witnessing an impressive rally since the beginning of 2023, barring a few minor fluctuations. The rally has primarily been driven by the technology sector, buoyed by the massive adoption of generative artificial intelligence (AI). Consequently, the tech-heavy Nasdaq Composite Index has surged 21% year to date after climbing 43.4% in 2023.
However, the tech-laden index has suffered a blow this month. The release of weaker-than-expected inflation data, several soft key economic data and the Fed Chairman’s recent dovish comment on interest rate cut, have skyrocketed market participants’ expectation of a 25-basis point rate cut in September. Investors are also anticipating at least two rate cuts by the end of 2024.
Following these developments, investors preference has shifted in July from overvalued technology stocks to beaten-down rate-sensitive cyclical sectors like industrials, financials, materials, energy and small-cap stocks. Over the past 18 months, shares of several AI-centric stocks have soared three to four times. Sector rotations in July have made the ongoing rally more broad-based.
Consequently, the Nasdaq Composite witnessed a bloodbath in the last few trading sessions. The index recorded an all-time high of 18,671.07 on Jul 11. Thereafter, the tech-heavy index tumbled 4.3% in five trading sessions. On Jul 17, the index fell 2.8% — its worst daily performance since December 2022.
Aside from technology stocks, several stocks from non-technology sectors have also flourished year to date. Despite being a tech-laden index, the Nasdaq Composite also carries a diversified structure. Several stocks from non-technology sectors are included on the index.
A few Nasdaq Composite-listed stocks, with a favorable Zacks Rank, from these non-technology sectors are set to thrive in second-half 2024, too. Investment in these stocks should be fruitful in the near to mid-term.
Our Top Picks
We have narrowed our search to five Nasdaq Composite-listed non-tech stocks that have strong growth potential for the rest of 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Costco Wholesale Corp.’s (COST - Free Report) key strengths are strategic investments, a customer-centric approach, merchandise initiatives, and an emphasis on membership growth. These factors have been helping COST to register decent sales and earnings numbers. We expect COST to register an 8.6% adjusted earnings per share improvement in fiscal 2024 on 4.8% revenue growth.
This outlook reflects COST’s ability to navigate the challenging operating environment, generate solid sales, and register high membership renewal rates. A favorable product mix, steady store traffic, pricing power, and strong liquidity position should help COST keep on outperforming.
Costco Wholesale has an expected revenue and earnings growth rate of 7.2% and 8.9%, respectively, for next year (ending August 2025). The Zacks Consensus Estimate for next-year earnings has improved 0.3% over the last seven days.
Texas Roadhouse Inc. (TXRH - Free Report) is a full-service, casual dining restaurant chain offering assorted seasoned and aged steaks hand-cut daily on the premises and cooked to order over open gas-fired grills. TXRH operates restaurants under the Texas Roadhouse and Aspen Creek names.
TXRH offers its guests a selection of ribs, fish, seafood, chicken, pork chops, pulled pork and vegetable plates, an assortment of hamburgers, salads and sandwiches. TXRH also provides supervisory and administrative services for other licensed and franchise restaurants.
Texas Roadhouse has an expected revenue and earnings growth rate of 15.3% and 33.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last seven days.
Intuitive Surgical Inc. (ISRG - Free Report) has benefited on the back of continued growth in the company’s da Vinci procedure volume, coupled with strong Ion procedure growth. ISRG’s initiative to increase the pricing of procedures should also continue to aid in sales growth in 2024.
Improving procedure volume along with better system placements and services across all markets will drive top-line growth of ISRG this year. The launch of da Vinci SP in Europe and da Vinci 5 in the U.S. market should drive ISRG’s system placements higher.
Intuitive Surgical has an expected revenue and earnings growth rate of 12.5% and 9.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the last 60 days.
Interactive Brokers Group Inc. (IBKR - Free Report) is a global automated electronic broker. IBKR’s efforts to develop proprietary software, low compensation expenses relative to net revenues, an increase in emerging market customers and higher interest rates are expected to boost revenues in the upcoming quarters.
IBKR executes, processes and trades in cryptocurrencies too. The commodities futures trading desk of IBKR also offers customers a chance to trade cryptocurrency futures. We project total net revenues to witness a CAGR of 5.2% over the next three years. IBKR’s enhanced capital distribution plans seem sustainable given a solid liquidity position.
Interactive Brokers Group has an expected revenue and earnings growth rate of 14.7% and 18.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.9% over the last seven days.
First Solar Inc. (FSLR - Free Report) remains the largest PV solar module manufacturer in the United States. FSLR is investing heftily in enhancing its manufacturing capacity to boost its revenue stream. Such manufacturing capacity expansion plans will enable FSLR to duly meet its production target of 15.6-16 gigawatts of solar modules by 2024 end. FSLR has also been innovating advanced solar modules to boost its portfolio.
First Solar has an expected revenue and earnings growth rate of 36.5% and 76.2%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days.
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5 Non-Tech Nasdaq Stocks to Buy Amid Index's Recent Bloodbath
Wall Street has been witnessing an impressive rally since the beginning of 2023, barring a few minor fluctuations. The rally has primarily been driven by the technology sector, buoyed by the massive adoption of generative artificial intelligence (AI). Consequently, the tech-heavy Nasdaq Composite Index has surged 21% year to date after climbing 43.4% in 2023.
However, the tech-laden index has suffered a blow this month. The release of weaker-than-expected inflation data, several soft key economic data and the Fed Chairman’s recent dovish comment on interest rate cut, have skyrocketed market participants’ expectation of a 25-basis point rate cut in September. Investors are also anticipating at least two rate cuts by the end of 2024.
Following these developments, investors preference has shifted in July from overvalued technology stocks to beaten-down rate-sensitive cyclical sectors like industrials, financials, materials, energy and small-cap stocks. Over the past 18 months, shares of several AI-centric stocks have soared three to four times. Sector rotations in July have made the ongoing rally more broad-based.
Consequently, the Nasdaq Composite witnessed a bloodbath in the last few trading sessions. The index recorded an all-time high of 18,671.07 on Jul 11. Thereafter, the tech-heavy index tumbled 4.3% in five trading sessions. On Jul 17, the index fell 2.8% — its worst daily performance since December 2022.
Aside from technology stocks, several stocks from non-technology sectors have also flourished year to date. Despite being a tech-laden index, the Nasdaq Composite also carries a diversified structure. Several stocks from non-technology sectors are included on the index.
A few Nasdaq Composite-listed stocks, with a favorable Zacks Rank, from these non-technology sectors are set to thrive in second-half 2024, too. Investment in these stocks should be fruitful in the near to mid-term.
Our Top Picks
We have narrowed our search to five Nasdaq Composite-listed non-tech stocks that have strong growth potential for the rest of 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Costco Wholesale Corp.’s (COST - Free Report) key strengths are strategic investments, a customer-centric approach, merchandise initiatives, and an emphasis on membership growth. These factors have been helping COST to register decent sales and earnings numbers. We expect COST to register an 8.6% adjusted earnings per share improvement in fiscal 2024 on 4.8% revenue growth.
This outlook reflects COST’s ability to navigate the challenging operating environment, generate solid sales, and register high membership renewal rates. A favorable product mix, steady store traffic, pricing power, and strong liquidity position should help COST keep on outperforming.
Costco Wholesale has an expected revenue and earnings growth rate of 7.2% and 8.9%, respectively, for next year (ending August 2025). The Zacks Consensus Estimate for next-year earnings has improved 0.3% over the last seven days.
Texas Roadhouse Inc. (TXRH - Free Report) is a full-service, casual dining restaurant chain offering assorted seasoned and aged steaks hand-cut daily on the premises and cooked to order over open gas-fired grills. TXRH operates restaurants under the Texas Roadhouse and Aspen Creek names.
TXRH offers its guests a selection of ribs, fish, seafood, chicken, pork chops, pulled pork and vegetable plates, an assortment of hamburgers, salads and sandwiches. TXRH also provides supervisory and administrative services for other licensed and franchise restaurants.
Texas Roadhouse has an expected revenue and earnings growth rate of 15.3% and 33.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last seven days.
Intuitive Surgical Inc. (ISRG - Free Report) has benefited on the back of continued growth in the company’s da Vinci procedure volume, coupled with strong Ion procedure growth. ISRG’s initiative to increase the pricing of procedures should also continue to aid in sales growth in 2024.
Improving procedure volume along with better system placements and services across all markets will drive top-line growth of ISRG this year. The launch of da Vinci SP in Europe and da Vinci 5 in the U.S. market should drive ISRG’s system placements higher.
Intuitive Surgical has an expected revenue and earnings growth rate of 12.5% and 9.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the last 60 days.
Interactive Brokers Group Inc. (IBKR - Free Report) is a global automated electronic broker. IBKR’s efforts to develop proprietary software, low compensation expenses relative to net revenues, an increase in emerging market customers and higher interest rates are expected to boost revenues in the upcoming quarters.
IBKR executes, processes and trades in cryptocurrencies too. The commodities futures trading desk of IBKR also offers customers a chance to trade cryptocurrency futures. We project total net revenues to witness a CAGR of 5.2% over the next three years. IBKR’s enhanced capital distribution plans seem sustainable given a solid liquidity position.
Interactive Brokers Group has an expected revenue and earnings growth rate of 14.7% and 18.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.9% over the last seven days.
First Solar Inc. (FSLR - Free Report) remains the largest PV solar module manufacturer in the United States. FSLR is investing heftily in enhancing its manufacturing capacity to boost its revenue stream. Such manufacturing capacity expansion plans will enable FSLR to duly meet its production target of 15.6-16 gigawatts of solar modules by 2024 end. FSLR has also been innovating advanced solar modules to boost its portfolio.
First Solar has an expected revenue and earnings growth rate of 36.5% and 76.2%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days.