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RETAILER KOHL'S CONFIRMS ITS RECEIPT OF TAKEOVER OFFER


DEEP DIVE: FAVORITE NASDAQ STOCKS WITH ‘BOTTOM’ SIGNALS POTENTIALLY EMERGING





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DEEP DIVE


HERE ARE WALL STREET’S FAVORITE NASDAQ STOCKS AS ‘SIGNALS AROUND BOTTOMS ARE
STARTING TO APPEAR’

Last Updated: Jan. 24, 2022 at 8:24 a.m. ET First Published: Jan. 24, 2022 at
8:23 a.m. ET
By

PHILIP VAN DOORN

  comments


THE NASDAQ-100 INDEX IS DOWN 14% FROM ITS 52-WEEK HIGH. ANALYSTS SEE AS MUCH AS
72% UPSIDE FOR EIGHT FAVORED STOCKS.

AMAZON PRIME BOXES ARE DELIVERED IN SYDNEY, AUSTRALIA. ANALYSTS SEE 44% UPSIDE
FOR THE COMPANY’S STOCK AFTER A 24% DECLINE FROM ITS 52-WEEK HIGH.

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REFERENCED SYMBOLS


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COMP
-2.72%
NDX
-2.75%
SPX
-1.89%
DJIA
-1.30%
RUT
-1.78%
QQQ
-2.77%
CRWD
-5.27%
AMZN
-5.95%
MRVL
-1.69%
WDAY
-2.41%
SNPS
-2.15%
GOOGL
-2.22%
PANW
-6.94%
MSFT
-1.85%

The past two years have been fruitful for stock investors, but recently the
market — especially tech stocks that trade high relative to earnings — has been
sensitive to the prospect of rising interest rates.

Analysts at Jefferies wrote in a note to clients on Jan. 22: “After a nearly
two-year period of ripping stocks … this pullback has been particularly
painful.”

But they see “signals that tend to perk up around bottoms are starting to
appear.”


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They added: “But in the spirit of ‘the market prices things in before they
happen,’ there doesn’t seem to a whole lot of the picture that the investment
community is missing.”

If they are right, it means investors have already priced in the uncertainty of
a rising-rate environment and geopolitical concerns, and the market should get
back on an upward path soon.

Below is a list of stocks in the Nasdaq-100 Index that are highly rated by
analysts and expected to rise in price by up to 72% over the next year.



Here’s how far the broad indexes have fallen from their all-time intraday highs:

Index Ticker Decline from high Close – Jan. 22 Intraday high Date of intraday 
high Nasdaq Composite Index COMP, -2.72% -15% 13,768.92 16,212.23 11/22/2021
Nasdaq-100 Index NDX, -2.75% -14% 14,438.40 16,764.86 11/22/2021 S&P 500 SPX,
-1.89% -9% 4,397.94 4,818.62 01/04/2022 Dow Jones Industrial Average DJIA,
-1.30% -7% 34,265.37 36,952.65 01/05/2022 Source: FactSet

Only the Nasdaq Composite Index COMP, -2.72% and Nasdaq-100 Index NDX, -2.75%
are considered to be in correction territory, with declines of at least 10% from
their 52-week intraday highs (which happen to be all-time highs for all four
indexes).

The Jefferies team cautioned that it might be too soon to assume the end of last
week was the worst of the pullback, but they also gave several reasons that it
might be:

 * “[T]he current 42-day slump since the NDX all-time high on 11/19 is already
   nearly as long as the tightening-caused ’18 selloff (which lasted 64 days).”
 * The market is pricing in four increases to the federal funds rate by the
   Federal Reserve this year, which may be overly aggressive.
 * Over the past seven interest-rate-increase cycles, “most of the pain tends to
   occur during the first month,” and the S&P 500 SPX, -1.89% and Russell 2000
   RUT, -1.78% indexes tend to perform better during the first 12 months
   following an initial rate increase than they perform in a “typical” 12-month
   period.
 * The 12-month performance of the S&P 500 was “positive after every single one
   of the last seven initial hikes.”

SCREENING THE NASDAQ-100

The Nasdaq-100 Index is made up of the 100 non-financial stocks in the full
Nasdaq Composite Index, by market capitalization. It is tracked by the Invesco
QQQ Trust QQQ, -2.77%.


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Among the Nasdaq-100, about two-thirds of the stocks are rated “buy” or the
equivalent by a majority of analysts polled by FactSet. Narrowing further to a
“conviction list,” here are the eight with at least 85% “buy” ratings, sorted by
upside potential over the next 12 months implied by consensus price targets
among analysts polled by FactSet:

Company Ticker Share “buy” ratings Closing price – Jan. 21 Consensus price
target Implied 12-month upside potential Decline from 52-week high CrowdStrike
Holdings Inc. Class A CRWD, -5.27% 87% $164.73 $283.30 72% -45% Amazon.com Inc.
AMZN, -5.95% 96% $2,852.86 $4,119.30 44% -24% Marvell Technology Inc. MRVL,
-1.69% 87% $72.55 $102.68 42% -23% Workday Inc. Class A WDAY, -2.41% 88% $245.69
$327.23 33% -20% Synopsys Inc. SNPS, -2.15% 88% $303.31 $401.13 32% -20%
Alphabet Inc. Class A GOOGL, -2.22% 94% $2,607.03 $3,360.65 29% -14% Palo Alto
Networks Inc. PANW, -6.94% 89% $483.63 $620.30 28% -16% Microsoft Corp. MSFT,
-1.85% 93% $296.03 $370.77 25% -15%

You can click on the tickers for more about each company.

Then read Tomi Kilgore’s detailed guide to the wealth of information available
for free on the MarketWatch quote page.

To the right, you can see how much the stocks have fallen from their 52-week
intraday highs. CrowdStrike Holdings Inc. CRWD, -5.27% has fared worst, but is
also expected by analysts to roar back the most.

Don’t miss: This sector of the S&P 500 is expected to show the fastest sales and
dividend growth in 2022 and 2023


READ NEXT


READ NEXT


EVEN AFTER STEEP DECLINES IN TESLA, MEME STOCKS AND CRYPTO, THIS MARKET HAS NO
SHORTAGE OF TRUE BELIEVERS

Investors have taken things to a whole new level and many still haven't learned
their lesson.


MORE ON MARKETWATCH

 * This sector of the S&P 500 is expected to show the fastest sales and dividend
   growth in 2022 and 2023
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   market’s worst storms
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   Eradicate COVID-19


ABOUT THE AUTHOR

Philip van Doorn


Philip van Doorn writes the Deep Dive investing column for MarketWatch. Follow
him on Twitter @PhilipvanDoorn.




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