Tech stocks have been the big winners this year, with the Nasdaq index up 25% since January. However, while some tech stocks have more than doubled their share price year to date, the current rally has not lifted all boats. Several tech-oriented stocks listed on the Nasdaq have actually fallen lower in recent months, presenting potential buying opportunities.
Many of the stocks that have declined are household names and leaders in their respective markets. The problems that have brought these stocks lower can be viewed as short-term issues that will be resolved in due course, prompting the share price to eventually rise.
Some of the stocks suffering a downturn are already showing signs of bottoming, making now an ideal time to take a position. Here are three Nasdaq sleeper stocks to buy before investors wake up to the opportunity.
Paramount Global (PARA)
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Don’t cut the dividend. That’s the message investors have delivered loud and clear to entertainment giant Paramount Global (NASDAQ:PARA).
The company’s share price has declined sharply since management announced that it is cutting its quarterly dividend payment to stockholders by 79% to just 5 cents a share. The dividend cut came at the same time that Paramount Global announced poor earnings for this year’s first quarter. The earnings miss and dividend cut sent PARA stock 25% lower in a single trading session.
PARA stock is now down 57% over the past 12 months, including a 13% drop so far in 2023. While the decline might scare off most investors, there is reason to view the pullback as a buying opportunity. While Paramount Global is struggling with a slumping advertising market, it owns numerous marquee properties, including Paramount Pictures movie studio, specialty TV channels such as MTV and Comedy Central, and franchises such as Top Gun and Star Trek. The stock may also continue to get a boost from Warren Buffett, a prominent shareholder.
Down 20% on the year, financial technology (fintech) and online payments company PayPal (NASDAQ:PYPL) looks like a good bet right now.
PYPL stock got hit coming out of the pandemic by concerns over declining growth and rising competition. However, the company continues to deliver strong earnings prints and bullish guidance. Most recently, PayPal guided for earnings per share of $4.95 for 2023, an annualized increase of 20%, and above previous estimates for 18% growth.
However, investors and traders have continued to bid PYPL stock lower following its latest earnings. This came on news that the company lost two million active accounts in Q1.
While concerning, there are other positive trends working in PayPal’s favor. These include the fact that total payment volume at PayPal grew an annualized 10% in Q1 to $355 billion, and the number of transactions on the platform grew 13% to 5.8 billion. Despite growing competition, PayPal remains the dominate player in online payments with 42% global market share.
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Chinese e-commerce company JD.com (NASDAQ:JD) has seen its share price decline 43% year to date. This steep pullback has drawn interest from several prominent investors. Investing legends George Soros and Michael Burry bought JD stock during Q1, as the company’s share price slipped lower. Clearly these two investing whales see an opportunity in buying the dip in one of China’s largest online retailers. JD.com currently is the largest technology company in China measured by revenue, having reported $151.7 billion in 2022 sales.
The company achieved a profit in Q1 of this year and announced an executive shake-up with current CEO Xu Lei stepping down after one year in the role. He is being replaced by current chief financial officer (CFO) Sandy Ran Xu. The company’s new leadership and profitability position JD.com for continued growth in coming quarters. Building a position in JD stock could be a good way for investors to capitalize on the reopening of the Chinese economy after prolonged Covid-19 lockdowns, which appears to be what Soros and Burry are betting on.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. 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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