The Nasdaq 100 index has officially entered correction territory, down 11% from a peak reached last month, showcasing the market's tumultuous nature as it fluctuates between highs and lows. The tech-heavy index, which contains the largest non-financial stocks listed on the Nasdaq stock exchange, has witnessed significant declines in high-profile stocks including Tesla, Palantir Technologies, and Amazon, with losses hitting 31%, 19%, and 16% respectively since their recent peaks.
The recent downturn is being felt across the board, but savvy investors recognize it may represent a buying opportunity. Market analysts highlight three specific companies within the index that they suggest could offer great returns despite their current pullbacks.
First on the list is Broadcom (NASDAQ:AVGO), whose stock is down 17% over the past month and 19% year-to-date, following a cautious second-quarter outlook projected at $14.9 billion in revenue, slightly below the $15.1 billion Wall Street expected. However, analysts note that Broadcom's revenue surged 25% compared to the previous year, and its adjusted earnings reached $1.60 per share, outperforming both company forecasts and market expectations. With AI chip revenue up 77% to $4.1 billion and underpinned by $9.3 billion in cash reserves, Broadcom's fundamentals remain robust, establishing it as a company that could present substantial upside potential for long-term investors.
Axon Enterprise (NASDAQ:AXON), another stock garnering attention, has recently seen its shares rise by 2% despite a notable decline of 25% last month due to an analyst downgrade. However, positive fourth-quarter results showed a 33% year-over-year increase in revenue, reaching $575 million, significantly exceeding estimates of $566 million. Earnings also topped forecasts at $2.08 per share. As Axon continues to achieve annual growth exceeding 30%, driven by innovative AI-driven tools, analysts believe it remains a dominant player in law enforcement technology, even amid shifting market dynamics.
Finally, Costco (NASDAQ:COST) is presented as another solid buy during this stock market downturn. With nearly 1,000 locations globally, including over 600 in the U.S., it provides consumers with value that has consistently attracted a vast membership base of 76.2 million paid subscribers. Although there are concerns surrounding potential price increases due to prospective tariffs, Costco's steady business model allows it to adjust relatively better than many competitors in the retail space. Wall Street maintains a strong buy rating with a target price of $1,029 per share, indicating a healthy 15% upside potential.
In recent speculative trading news, on March 18, 2025, Caton Frates, Executive Vice President at Costco, affected insider trading by selling 850 shares, reducing his stake in the company to 7,875.772 shares. Such movements are closely monitored as they can signal insider sentiment regarding the company’s future.
This week, the broader market has also been influenced by active options trading, with the S&P 500 rising by 0.42% early in the week. A remarkable 1,048 instances of unusual options activity were noted, including one significant option trade involving Costco, which points towards investor confidence in the stock’s potential amidst the turbulence. Options strategies including covered calls, married puts, and protective collars are recommended for those looking to capitalize on Costco's strong fundamentals.
In conclusion, while the Nasdaq 100 has seen alarming declines, the downturn presents a distinctive opportunity for investors. Broadcom, Axon Enterprise, and Costco emerge as three compelling stocks for long-term consideration amidst market corrections. The focus on these quality companies attests to the resilience of certain sectors within the stock market, providing pathways for recovery as the current landscape evolves.
