The 3 Most Undervalued Nasdaq 100 Stocks to Buy in February 2024
The Nasdaq 100 is a stock market index comprised of the largest non-financial companies listed on the Nasdaq stock exchange. Many investors refer to it as an index of the 100 largest technology companies in America.
Owing to its make-up, the Nasdaq 100 tends to outperform other stock market indexes such as the Dow Jones Industrial Average and S&P 500. It also tends to do better than the broader Nasdaq index that includes more than 2,500 stocks. Owing to its concentration in the largest and most profitable tech stocks, the Nasdaq 100 can be a great exchange-traded fund (ETF) to own.
Yet despite its outperformance, the Nasdaq 100 is not infallible. There are several stocks in the index that have been beaten down in recent years and trade at low share prices and cheap valuations. Here are the three most undervalued Nasdaq 100 stocks to buy in February 2024.
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PayPal Holdings (PYPL)
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Shares of PayPal Holdings (NASDAQ:PYPL) just got knocked 11% lower after the financial technology and payments company issued weak forward guidance. The guidance overshadowed the fact that PayPal reported much better-than-expected fourth-quarter financial results, posting earnings per share (EPS) of $1.48 compared to $1.36 that was expected on Wall Street. Revenue in the quarter came in at $8.03 billion, beating analysts’ estimates of $7.87 billion.
Unfortunately, PayPal provided disappointing guidance, sending its stock lower as a result. The company said that it anticipates full-year earnings of $5.10 a share, which is below the $5.48 that analysts had expected. The latest earnings report comes after PayPal announced plans to layoff 9% of its workforce to help reduce costs. PayPal faces growing competition for its payment service from technology giants such as Apple (NASDAQ:AAPL).
PYPL stock is now down 28% over the last 12 months and trading at just 14 times future earnings estimates, which is rock bottom for a tech stock of its size.
The Trade Desk (TTD)
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Shares of The Trade Desk (NASDAQ:TTD) also got clobbered after the company’s last earnings print. TTD stock fell 25% after the advertising technology firm issued revenue guidance that fell short of Wall Street estimates. While the company’s Q3 2023 financial results beat forecasts, they too were overshadowed by subpar guidance. The Trade Desk forecast revenue in the fourth quarter of last year of $580 million, which was below the $610 million expected among analysts.
Management said that the advertising market was hurt last year by strikes in the U.S. automotive sector and entertainment industry. The Trade Desk’s technology helps companies reach potential customers across the internet with targeted advertisements. While the outlook for the final months of last year was grim, there is expected to be a rebound in online ads this year with the presidential election getting into full-swing.
TTD stock has slumped 13% in the last six months, but the shares could stage a recovery when the company reports its Q4 2023 results on Feb. 15.
Texas Instruments (TXN)
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For a microchip and semiconductor stock, Texas Instruments (NASDAQ:TXN) has had a tough go of it. TXN stock is down nearly 10% in the last 12 months, including a 5% decline so far in 2024. Compare that to a 60% gain in the VanEck Semiconductor ETF (NASDAQ:SMH) over the past year. Despite designing the chips and semiconductors that go into products ranging from motor vehicles to consumer electronics, Texas Instruments and its stock continue to lag the market.
TXN stock has been slumping ever since the company issued tepid forward guidance that left analysts and investors feeling underwhelmed. Texas Instruments said that it anticipates $3.45 billion to $3.75 billion in revenue for the current first quarter of 2024, and 96 cents to $1.16 in EPS. Analysts had a consensus Q1 forecast of $4.05 billion in revenue and $1.40 a share in profit. Management said that demand remains weak and that customers will reduce their microchip inventories over the coming year.
While the current situation with TXN stock is disappointing, the shares currently trade at 22 times future earnings estimates, which is about as low as a person is likely to find in a chip stock these days. Texas Instruments also pays a quarterly dividend of $1.30 per share, giving the stock a strong yield of 3.25%.
On the date of publication, Joel Baglole held a long position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.
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