The Nasdaq 100 (^NDX) is home to some of the biggest success stories in tech and growth investing. However, certain stocks in the index face challenges like profitability concerns, rising costs, or shifts in market trends.
Investing in Nasdaq 100 stocks isn’t just about picking big names - it’s about finding the right ones, and that’s where StockStory comes in. That said, here are two Nasdaq 100 stocks driving the future of tech and one that may struggle.
One Stock to Sell:
Keurig Dr Pepper (KDP)
Market Cap: $39.79 billion
Born out of a 2018 merger between Keurig Green Mountain and Dr Pepper Snapple, Keurig Dr Pepper (NASDAQ: KDP) is a consumer staples powerhouse boasting a portfolio of beverages including sodas, coffees, and juices.
Why Does KDP Fall Short?
- Sizable revenue base leads to growth challenges as its 5.9% annual revenue increases over the last three years fell short of other consumer staples companies
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 6.1 percentage points
- Underwhelming 5.8% return on capital reflects management’s difficulties in finding profitable growth opportunities
Keurig Dr Pepper’s stock price of $29.28 implies a valuation ratio of 14x forward P/E. Check out our free in-depth research report to learn more about why KDP doesn’t pass our bar.
Two Stocks to Watch:
Micron (MU)
Market Cap: $136.5 billion
Founded in the basement of a Boise, Idaho dental office in 1978, Micron (NYSE: MU) is a leading provider of memory chips used in thousands of devices across mobile, data centers, industrial, consumer, and automotive markets.
Why Does MU Stand Out?
- Market share has increased this cycle as its 36.4% annual revenue growth over the last two years was exceptional
- Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 40.3%
- Additional sales over the last five years increased its profitability as the 22.8% annual growth in its earnings per share outpaced its revenue
At $121.83 per share, Micron trades at 12.2x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Cadence Design Systems (CDNS)
Market Cap: $96.54 billion
Powering the chips behind everything from smartphones to AI accelerators for over 35 years, Cadence Design Systems (NASDAQ: CDNS) provides essential computational software, hardware, and intellectual property used by engineers to design and verify advanced electronic systems and semiconductors.
Why Is CDNS on Our Radar?
- Billings growth has averaged 25.5% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
- Strong free cash flow margin of 31.1% enables it to reinvest or return capital consistently
Cadence Design Systems is trading at $354.29 per share, or 17.5x forward price-to-sales. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
High-Quality Stocks for All Market Conditions
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