Earlier this month, the CBOE Volatility Index or VIX shot higher, indicating extreme pessimism among investors. While not a directional index per say, the VIX measures anticipated market movement. Since equities tend to accelerate faster during downcycles than up, a heightened VIX is generally equivalent to negative expectations. Not surprisingly, several high-flying Nasdaq stocks suffered in recent sessions.
However, the narrative may be shifting. Recently, the Producer Price Index showed a slower rise than expected. That may give the Federal Reserve the green light to lower the benchmark interest rate, which is what Wall Street has been seeking. To be sure, there are some risks with this approach; namely, the Fed needs to avoid stirring too much panic.
Still, a possible case exists that the central bank could provide the necessary dovishness while keeping a tidy house. If so, retail investors may want to keep close tabs on certain intriguing innovators. Below are Nasdaq stocks to buy following the market meltdown.
AudioEye (AEYE)
Falling under the application software industry, AudioEye (NASDAQ:AEYE) provides digital accessibility solutions. Specifically, the company ensures websites and digital content are accessible to users with disabilities. Socially, the narrative makes plenty of sense due to the pressing need for social equity. That includes digital access across income and physical abilities.
But AudioEye is more than just a feel-good narrative. In the trailing 12 months, the company posted sales of $32.26 million. In the most recent quarter, the company’s year-over-year growth rate landed at 8.1%. Further, while the company isn’t profitable, its losses per share consistently slips below the expected red ink.
Now, it must be said that AEYE stock trades at 7.83X trailing-year revenue. That’s high compared to the underlying industry, which runs an average multiple of 3.87X. However, by the end of fiscal 2024, analysts are looking for sales to hit $34.67 million. If so, that would be up 10.7% from the prior year.
In addition, fiscal 2025 revenue may rise to $40.73 million. The high-side estimate calls for $41.62 million. Therefore, AEYE ranks as one of the Nasdaq stocks to buy.
ASML (ASML)
Operating in the semiconductor equipment and materials sector, ASML (NASDAQ:ASML) is a Dutch firm that designs and manufactures photolithography machines used in the production of advanced semiconductors. Essentially, the company commands a monopoly on extreme ultraviolet (EUV) lithography, which involves printing intricate designs on silicon wafers. To say that ASML is one of the most important Nasdaq stocks would be a gross understatement.
A top selling point about ASML stock is that the underlying entity features robust financial performances. In the past year since the second quarter, the tech giant posted an average earnings per share of $4.64. This figure easily beat the collective consensus view of $4.31, yielding an average earnings surprise of 7.93%.
If there is a drawback to ASML stock, it’s that the valuation isn’t what you would call cheap. Trading at 12.09X sales, it’s even higher than the prior year’s running average of 11.46X. However, the market previously accepted a multiple of 14.41X during Q2. Thus, ASML could rise to its prior valuation.
Following a soft performance in fiscal 2024, analysts see a big spike in sales in 2025. Therefore, it’s one of the Nasdaq stocks to keep close tabs on.
AppLovin (APP)
Conducting business in the infrastructure software realm, AppLovin (NASDAQ:APP) provides software and services for mobile app developers. The offerings include tools for user acquisition, monetization and analytics. It’s an intriguing idea for Nasdaq stocks to buy due to the rising popularity of mobile gaming and app usage. As this connectivity arena expands in scope and scale, APP stock could tag along for the ride.
Financially, the company has been consistently delivering the goods. In the past year since Q2, the company posted an average EPS of 59 cents. This figure beat the expected print of 49 cents, thus yielding an average earnings surprise of 21.83%. It’s also expanding at a rapid clip. In the most recent quarter, AppLovin saw sales growth of 44%.
Yes, APP stock trades at 6.62X sales, which is high for the industry. However, in Q2, the market accepted multiple of 8.18X. So, there’s room for expansion. In addition, analysts are targeting revenue of $4.4 billion by year’s end. If so, that would imply a growth rate of 34.1%. It’s easily one of the names to watch.
On the date of publication, Josh Enomoto 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
