Business and Finance

More than a quarter of Nasdaq-100 stocks are in bear markets — Wall Street sees a buying opportunity


The Nasdaq-100 Index has carried out very effectively in opposition to the broader S&P 500 index in current years and it’s down solely 6% from its file intraday excessive set on Sept. 7. Even so, extra than a quarter of stocks in the Nasdaq-100 are in bear markets — down no less than 20% from their 52-week highs.

Before these stocks, let’s take a fast have a look at the Nasdaq-100 Index
NDX.
It is made up of the most important 100 non-financial stocks in the total Nasdaq Composite Index
COMP
and is weighted by market capitalization. The Nasdaq-100 has vastly outperformed the S&P 500 index
SPX
(which can also be weighted by market cap) in current years.

Using exchange-traded funds that observe each — the Invesco QQQ Trust
QQQ
for the Nasdaq-100 and the SPDR S&P 500 ETF Trust
SPY,
right here is a 10-year chart exhibiting whole returns, with dividends reinvested:

im 408589?width=700&height=620

FactSet

One motive for QQQ’s outperformance over the previous 10 years has been its heavy focus in big tech corporations. As of the shut on Sept. 27, the highest 5 corporations held by QQQ (Apple Inc.
AAPL,
Microsoft Corp.
MSFT,
Amazon.com Inc.
AMZN,
Tesla Inc.
TSLA
and two common-share courses of Alphabet Inc.
GOOG

GOOGL
) made up 41.3% of the portfolio. Meanwhile the highest 5 positions of SPY (the identical, besides change Tesla with Facebook Inc.
FB
) made up 22.6% of its portfolio.

Another necessary distinction between the indexes is the Nasdaq-100 contains American depositary receipts of some non-U.S. corporations, whereas the S&P 500 excludes ADRs. Some of the ADRs held by QQQ are included in the checklist beneath.

Here’s a comparability of common annual returns for the 2 ETFs over many intervals:

ETF

3 Years

5 Years

10 years

15 Years

20 Years

Invesco QQQ Trust
QQQ
25.6%

25.8%

22.0%

16.6%

14.2%

SPDR S&P 500 ETF Trust
SPY
16.3%

17.0%

16.4%

10.3%

9.5%

Source: FactSet

One factor to control is the relative value of the indexes/ETFs. QQQ seems to be a bit costly relative to the place it normally trades in opposition to SPY. Here’s a comparability of present ahead price-to-earnings ratios with averages:

ETF

Forward P/E

10-year common ahead P/E

15-year common ahead P/E

Invesco QQQ Trust
QQQ
26.95

19.32

18.73

SPDR S&P 500 ETF Trust

20.82

16.37

15.26

Source: FactSet

So QQQ now trades for 129% of SPY’s ahead P/E valuation. It has traded for 118% of SPY’s ahead P/E on common over 10 years and 123% based mostly on the 15-year averages.

The Nasdaq-100 bear checklist

There are truly 102 stocks in the Nasdaq-100 as a result of Alphabet and Fox Corp. have two common-share courses apiece. Here are the 22 stocks amongst them that have been down no less than 20% from their 52-week highs as of the shut on Sept. 28:

Company

Decline from 52-week excessive

52-week excessive

Date of 52-week excessive

Closing Price – Sept. 28

Pinduoduo Inc. ADR Class A
PDD
-58.1%

$212.60

02/16/2021

$89.00

Baidu Inc. ADR Class A
BIDU
-56.6%

$354.82

02/22/2021

$154.02

Zoom Video Communications Inc. Class A
ZM
-55.5%

$588.84

10/19/2020

$261.89

Peloton Interactive Inc. Class A
PTON
-48.7%

$171.09

01/14/2021

$87.80

Biogen Inc.
BIIB
-39.2%

$468.55

06/07/2021

$284.71

Splunk Inc.
SPLK
-37.3%

$222.19

10/21/2020

$139.42

NetEase Inc. ADR
NTES
-37.0%

$134.33

02/11/2021

$84.69

Vertex Pharmaceuticals Inc.
VRTX
-35.4%

$280.99

10/13/2020

$181.60

Trip.com Group Ltd. ADR
TCOM
-33.6%

$45.19

03/17/2021

$30.01

Incyte Corp.
INCY
-32.3%

$101.47

01/25/2021

$68.68

JD.com Inc. ADR Class A
JD
-30.4%

$108.29

02/17/2021

$75.42

Dollar Tree Inc.
DLTR
-28.3%

$120.37

04/06/2021

$86.28

Activision Blizzard Inc.
ATVI
-27.0%

$104.53

02/16/2021

$76.33

Illumina Inc.
ILMN
-26.2%

$555.77

02/12/2021

$410.20

Sirius XM Holdings Inc.
SIRI
-25.1%

$8.14

01/27/2021

$6.10

Micron Technology Inc.
MU
-24.6%

$96.96

04/12/2021

$73.10

Seagen Inc.
SGEN
-24.6%

$213.94

10/13/2020

$161.40

Amgen Inc.
AMGN
-23.3%

$276.69

01/28/2021

$212.27

Moderna Inc.
MRNA
-22.8%

$497.49

08/10/2021

$384.21

Qualcomm Inc.
QCOM
-22.7%

$167.94

01/20/2021

$129.90

Paccar Inc.
PCAR
-21.7%

$103.19

01/21/2021

$80.82

Intel Corp.
INTC
-21.2%

$68.49

04/12/2021

$54.00

Source: FactSet

You can click on the tickers for extra about every firm. Click here for Tomi Kilgore’s information to the wealth of information accessible at no cost on the quote web page.

Pinduoduo Inc. and Baidu Inc. high the checklist, with sharp declines from their 52-week highs, as traders proceed to marvel how the Chinese authorities’s crackdowns on numerous industries may have an effect on them. China’s Cyberspace Administration set out new guidelines for algorithms used by companies providing internet services on Wednesday. Investor are additionally involved about the health of China’s credit markets.

Here’s a abstract of opinion for the group amongst analysts polled by FactSet:

Company

Share “buy” scores

Share impartial scores

Share “sell” scores

Closing Price – Sept. 28

Cons. value goal

Implied 12-month upside potential

Pinduoduo Inc. ADR Class A
PDD
79%

21%

0%

$89.00

$136.54

35%

Baidu Inc. ADR Class A
BIDU
86%

9%

5%

$154.02

$256.77

40%

Zoom Video Communications Inc. Class A
ZM
52%

44%

4%

$261.89

$363.11

28%

Peloton Interactive Inc. Class A
PTON
74%

19%

7%

$87.80

$129.67

32%

Biogen Inc.
BIIB
52%

48%

0%

$284.71

$418.24

32%

Splunk Inc.
SPLK
62%

38%

0%

$139.42

$179.90

22%

NetEase Inc. ADR
NTES
94%

6%

0%

$84.69

$124.99

32%

Vertex Pharmaceuticals Inc.
VRTX
74%

19%

7%

$181.60

$260.67

30%

Trip.com Group Ltd. ADR
TCOM
71%

29%

0%

$30.01

$37.25

19%

Incyte Corp.
INCY
60%

40%

0%

$68.68

$101.27

32%

JD.com Inc. ADR Class A
JD
94%

6%

0%

$75.42

$93.02

19%

Dollar Tree Inc.
DLTR
36%

60%

4%

$86.28

$105.52

18%

Activision Blizzard Inc.
ATVI
94%

6%

0%

$76.33

$115.34

34%

Illumina Inc.
ILMN
15%

65%

20%

$410.20

$455.19

10%

Sirius XM Holdings Inc.
SIRI
65%

29%

6%

$6.10

$7.60

20%

Micron Technology Inc.
MU
87%

13%

0%

$73.10

$104.60

30%

Seagen Inc.
SGEN
57%

38%

5%

$161.40

$187.35

14%

Amgen Inc.
AMGN
31%

61%

8%

$212.27

$246.10

14%

Moderna Inc.
MRNA
31%

44%

25%

$384.21

$351.40

-9%

Qualcomm Inc.
QCOM
64%

36%

0%

$129.90

$184.15

29%

Paccar Inc.
PCAR
53%

42%

5%

$80.82

$99.56

19%

Intel Corp.
INTC
37%

39%

24%

$54.00

$61.98

13%

Source: FactSet

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Source Link – www.marketwatch.com

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