The Nasdaq Composite has increased by 127% over the last five years, outperforming the S&P 500's 95% rise in that period. This difference illustrates the power of tech, with the Nasdaq home to many of the world's leading tech giants. Companies like Apple, Nvidia, Microsoft, Alphabet, and Amazon (NASDAQ: AMZN) are collectively worth more than $13 trillion, or 60% of the Nasdaq Composite.
The index has a long growth history, driven by the innovations of its many tech giants. As a result, a recent dip in the market has made now a compelling time to bulk up your portfolio with some of the most reliable growth stocks.
Over the last 30 days, the Nasdaq has tumbled 5%. Earlier this month, the Bureau of Labor Statistics reported that the U.S. had added 114,000 jobs in July. The figure illustrated a significant slowdown from the 179,000 jobs added in June, prompting fears of a recession and a sell-off in the stock market that hit tech companies particularly hard.
However, tech remains one of the best long-term growth markets, known for offering patient investors consistent gains. As a result, a sell-off is an exciting time to add some new names to your list of holdings at an attractive value.
So, here are two unstoppable growth stocks to buy right now after a Nasdaq sell-off.
1. ASML Holding NV
ASML Holding NV's (NASDAQ: ASML) share price has dipped 14% in the last month. Strained relations between the U.S. and China have led to increasingly stringent regulations on chip exports. As a leader in chipmaking equipment, geopolitical concerns have caused investors to pull back from ASML's stock.
However, the Dutch company's crucial role in tech and growth catalysts from budding industries like artificial intelligence (AI) indicate ASML remains a solid long-term investment.
ASML is the kingpin of lithography, accounting for more than 80% of the market. The company has carved out a lucrative role in tech, producing lithography systems for optically etching circuit patterns onto silicon wafers. ASML's technology is critical to chip production, and some of its biggest clients include Taiwan Semiconductor Manufacturing, Samsung, and Intel.
The company's success over the years has seen its share price rise nearly 900% over the last decade, while revenue and operating income climbed 284% and 518%. ASML has proven to be a valuable growth stock over the years but is likely not yet done.
ASML hasn't experienced massive growth in 2024, with revenue down 10% year over year in the second quarter. However, the company has said, "We see 2024 as a transition year," as clients like TSM and Intel temporarily pause chip fab expansions amid macroeconomic uncertainty and a surplus in chip inventory. However, ASML expects growth to accelerate in 2025 as shipments for its extreme ultraviolet (EUV) systems rise alongside increased demand for smaller and denser chips.
ASML's stock isn't a huge bargain, trading at 44 times its forward earnings. However, that figure is below its year-to-date average for the metric during a period that saw its shares rise 21%. Alongside an indispensable role in the chip market, ASML remains a compelling buy after a sell-off.
2. Amazon
Unstoppable is an excellent word to describe Amazon's growth in recent years. The company's stock is up 105% since 2019. Meanwhile, revenue and operating income have soared 112% and 365%. Dominant positions in e-commerce and cloud computing with Amazon Web Services (AWS) have built the tech giant into a cash cow, with free cash flow increasing more than 1,000% to $48 billion in the last three years.
Amazon's success is primarily owed to consistent reinvestment in its business. Over the last decade, the company has gone on a spending spree, expanding its reach in retail, opening AWS data centers in multiple regions at home and abroad, and introducing ads on its streaming service Prime Video. Recent moves have paid off, diversifying its revenue streams and delivering consistent financial growth.
The company posted its Q2 2024 earnings earlier this month, which illustrated the strength of its increasingly diverse business. Revenue rose 10% year over year, slightly missing expectations. However, the real win came in operating income, which more than doubled from the previous year to just under $15 billion.
Q2 brought solid gains from AWS as the company benefited from recent investments in AI. The segment saw revenue increase by 19% year over year, as operating income climbed 74%. AWS earned less revenue than Amazon's two retail segments yet was responsible for 64% of the company's total operating income for the quarter.
Amazon is on a promising growth trajectory. Although its stock is down 8% since mid-July, its price-to-sales ratio has dropped to an attractive 3. As a result, this growth stock is just too good to ignore right now.
Should you invest $1,000 in ASML right now?
Before you buy stock in ASML, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and ASML wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $779,735!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of August 12, 2024
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Alphabet, Amazon, Apple, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short August 2024 $35 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Nasdaq Sell-Off: 2 Unstoppable Growth Stocks to Buy Right Now was originally published by The Motley Fool