The NASDAQ soared to an all-time high on October 7, getting a boost from tech and mega-cap stocks. In an interview with CNBC on October 26, Nick Colas, Co-Founder at DataTrek Research Nick shared his insights on the current market trends and the potential for the tech-heavy index to continue its upward momentum. Colas discussed the historical data on the index’s performance in the third year of a bull market, highlighting that in six out of ten instances, the index continued to rally, while in four instances, it did not.
Colas noted that the overall churn for the index in the third year of a bull market is 4.4%, which is not impressive, but attributed this to the four losing years of 1984, 1987, 1990, and 2011, which were marked by significant events such as the 1987 crash and the 1990 invasion of Iraq. However, when these numbers are excluded, the average return for the index in the third year of a bull market is 13.3%. Colas expressed his optimism that as long as there are no major catalytic events, the momentum is likely to continue, and the NASDAQ could see at least a 10% return, if not better.
Colas argued that the index’s performance has not been uniform, with other groups and small caps taking leadership occasionally, indicating a healthier market than in the 1990s, when tech stocks dominated. He also pointed out that while the NASDAQ is up 45% over the past 12 months, its three-year returns, including the 2022 bear market, are more modest, suggesting that the index still has room to run.
Colas acknowledged that valuations are high, but emphasized that valuations are notoriously bad at timing the market. He believes despite the high valuations, the NASDAQ’s momentum and the overall market trend could continue to drive the index higher.
The NASDAQ’s recent surge to an all-time high has sparked optimism about its future performance, with some experts predicting continued growth despite high valuations. While there are always uncertainties and potential risks, the current trend suggests that the index may have further room to run. With that in context, let’s take a look at the 10 oversold NASDAQ stocks to invest in now.
Photo by Pascal Bernardon on Unsplash
Our Methodology
To compile our list of the 10 oversold NASDAQ stocks to invest in now, we used the Finviz and Yahoo stock screeners to find the largest NASDAQ stocks that have fallen significantly on a YTD basis and have a forward P/E of less than 15, as of October 23. We then narrowed our choices to 10 stocks according to their hedge fund sentiment, which was taken from our database of 912 elite hedge funds as of Q2 of 2024. The list is sorted in ascending order of their hedge fund sentiment, as of the second quarter.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Oversold NASDAQ Stocks To Invest In Now
10. Concentrix Corporation (NASDAQ:CNXC)
Number of Hedge Fund Investors: 25
Forward P/E Ratio as of October 23: 3.75
YTD Performance as of October 23: -54.02%
Concentrix Corporation (NASDAQ:CNXC) is a global provider of customer experience (CX) solutions, delivering technology and services across industries such as technology, retail, banking, communications, and healthcare. The company’s revenue is generated through billing for service hours or transaction volumes processed for clients, supported by its broad market presence with operations in North America, EMEA, APAC, and LATAM.
Demand for Concentrix Corporation’s (NASDAQ:CNXC) CX solutions remains high, and its offerings in process automation and data analytics distinguish it from competitors. The company’s extensive global reach and diverse customer base create a strong foundation for sustained growth.
Concentrix Corporation’s (NASDAQ:CNXC) investments in technology and generative AI further enhance its position. The company’s AI advancements in knowledge management, customer support, and automation are expected to drive efficiency, supported by the recent patent for its AI platform, GILES, which automates coding and testing processes—highlighting Concentrix’s dedication to innovation.
With a strong financial performance, strategic positioning in the CX industry, and forward-looking investments in technology and AI, Concentrix Corporation (NASDAQ:CNXC) presents a compelling investment opportunity. Analysts are optimistic, with a consensus Buy rating and a target price of $76.83, representing a potential 39.66% upside from its current level.
9. Xerox Holdings Corporation (NASDAQ:XRX)
Number of Hedge Fund Investors: 28
Forward P/E Ratio as of October 23: 5.78
YTD Performance as of October 23: -43.21%
Xerox Holdings Corporation (NASDAQ:XRX) operates as a holding company, with subsidiaries that provide products such as printers, scanners, and related supplies.
Although once a leading name in printing and copying technology, Xerox Holdings Corporation (NASDAQ:XRX) has faced challenges in recent years due to declining demand for physical document solutions. In response, the company is actively pivoting toward IT services and software solutions and is exploring opportunities in emerging areas.
On October 17, Xerox Holdings Corporation (NASDAQ:XRX) announced that it entered into a definitive agreement to acquire ITsavvy, a leading provider of integrated IT products and services, in a deal valued at $400 million. The acquisition is a strategic move by Xerox Holdings Corporation (NASDAQ:XRX) to expand its IT Services capabilities and diversify its revenue streams in the geographies it serves. ITsavvy is a portfolio company of GenNx360 Capital Partners, which has established itself as a leading provider of integrated IT infrastructure solutions, delivering business outcomes through client experiences across multiple segments and industries.
The acquisition of ITsavvy is a key component of Xerox Holdings Corporation’s (NASDAQ:XRX) reinvention and commitment to expand its IT Services business and aims to transform the company into a more agile and innovative organization. By expanding its IT Services capabilities, Xerox Holdings Corporation (NASDAQ:XRX) will be able to offer a broader range of solutions to its clients, helping them to transform the way they work and achieve their business objectives.
Xerox Holdings Corporation (NASDAQ:XRX) is also known for its history of innovation and continues to invest in research and development, securing patents that may prove valuable in the future. The company has outlined a strategic plan to drive revenue and earnings growth, which includes new technology development and a focus on strengthening its operating model.
For the latter half of 2024, Xerox Holdings Corporation (NASDAQ:XRX) anticipates improved revenue growth fueled by equipment orders and product launches, with a focus on expanding its offerings in the A4 and A3 printing categories and exploring new segments in the production market.