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.
With rapid innovation comes rapid change, and StockStory is here to help you identify which Nasdaq 100 stocks are still worth your money. Keeping that in mind, here is one Nasdaq 100 stock that has huge potential and two that may face some trouble.
Two Stocks to Sell:
Microchip Technology (MCHP)
Market Cap: $36.71 billion
Spun out from General Instrument in 1987, Microchip Technology (NASDAQ: MCHP) is a leading provider of microcontrollers and integrated circuits used mainly in the automotive world, especially in electric vehicles and their charging devices.
Why Are We Out on MCHP?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 3.6% annually over the last five years
- Inability to adjust its cost structure while its revenue declined over the last five years led to a 11.6 percentage point drop in the company’s operating margin
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 16 percentage points
Microchip Technology’s stock price of $68.25 implies a valuation ratio of 60.2x forward P/E. Dive into our free research report to see why there are better opportunities than MCHP.
Vertex Pharmaceuticals (VRTX)
Market Cap: $114.6 billion
Founded in 1989 with a mission to create medicines that treat the underlying causes of disease rather than just symptoms, Vertex Pharmaceuticals (NASDAQ: VRTX) develops and markets transformative medicines for serious diseases, with a focus on cystic fibrosis, sickle cell disease, and pain management.
Why Do We Think Twice About VRTX?
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 15.6% annually
- Free cash flow margin shrank by 58.8 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Waning returns on capital imply its previous profit engines are losing steam
Vertex Pharmaceuticals is trading at $445.25 per share, or 24.1x forward P/E. If you’re considering VRTX for your portfolio, see our FREE research report to learn more.
One Stock to Buy:
Monster (MNST)
Market Cap: $61.44 billion
Founded in 2002 as a natural soda and juice company, Monster Beverage (NASDAQ: MNST) is a pioneer of the energy drink category, and its Monster Energy brand targets a young, active demographic.
Why Should You Buy MNST?
- Disciplined cost controls and effective management resulted in a strong two-year operating margin of 27.3%
- MNST is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its improved cash conversion implies it’s becoming a less capital-intensive business
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
At $63.06 per share, Monster trades at 33.5x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.
