The Nasdaq 100 (^NDX) is known for housing some of the most innovative and fastest-growing companies in the market. But not every stock in the index is a winner - some are struggling with slowing growth, increasing competition, or unsustainable valuations.
With rapid innovation comes rapid change, and StockStory is here to help you identify which Nasdaq 100 stocks are still worth your money. Keeping that in mind, here is one Nasdaq 100 stock driving the future of tech and two that may struggle.
Two Stocks to Sell:
Comcast (CMCSA)
Market Cap: $85.63 billion
Formerly known as American Cable Systems, Comcast (NASDAQ: CMCSA) is a multinational telecommunications company offering a wide range of services.
Why Do We Steer Clear of CMCSA?
- Demand for its offerings was relatively low as its number of domestic broadband customers has underwhelmed
- Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 3.9 percentage points over the next year
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
Comcast’s stock price of $23.73 implies a valuation ratio of 7x forward P/E. If you’re considering CMCSA for your portfolio, see our FREE research report to learn more.
Warner Bros. Discovery (WBD)
Market Cap: $67.33 billion
Formed from the merger of WarnerMedia and Discovery, Warner Bros. Discovery (NASDAQ: WBD) is a multinational media and entertainment company, offering television networks, streaming services, and film and television production.
Why Is WBD Risky?
- The company has faced growth challenges as its 14.7% annual revenue increases over the last five years fell short of other consumer discretionary companies
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 8.8% for the last two years
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Warner Bros. Discovery is trading at $26.82 per share, or 4,701.9x forward P/E. Check out our free in-depth research report to learn more about why WBD doesn’t pass our bar.
One Stock to Watch:
Costco (COST)
Market Cap: $432.7 billion
Designed to be a one-stop shop for the suburban consumer, Costco (NASDAQ: COST) is a membership-only retail chain that sells groceries, apparel, toys, and household items, often in bulk quantities.
Why Do We Watch COST?
- Locations open for at least a year are seeing increased demand as same-store sales have averaged 6.6% growth over the past two years
- Massive revenue base of $293.6 billion makes up for its weaker gross margin and makes it a household name that influences purchasing decisions
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures, and its returns are growing as it capitalizes on even better market opportunities
At $925 per share, Costco trades at 42.8x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
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