For the last two-and-a-bit years, the Nasdaq Composite has been a great hunting ground for investors seeking stocks to buy. By mid-February, the tech-driven index had skyrocketed 94% within that period!
However, it ended last Thursday (6 March) at 18,069 points. This meant it had fallen more than 10% since December, officially putting it in correction territory.
Nobody knows where things will head next, but history suggests that buying high-quality Nasdaq stocks on previous dips has been a winning strategy for long-term investors.
Here are two shares I think are worth considering.
MercadoLibre
The first is MercadoLibre (NASDAQ: MELI). This is the Amazon/PayPal of Latin America, operating across 18 countries. As well as running the region’s largest e-commerce marketplace, it has fast-growing fintech and advertising businesses, as well as an Amazon Prime-like subscription service.
In 2024, the company’s revenue soared 38% year on year to $21bn, while net profit almost doubled to $1.9bn.
The stock isn’t cheap at 5 times sales and 43 times forward earnings. MercadoLibre will have to keep growing quickly to justify its valuation, while also fending off competition from cheap Chinese shopping apps. These are risks to consider.
According to management though, Latin America’s still a decade behind the US in terms of e-commerce penetration. And MercadoLibre aims to grow its annual users from 100m today to 300m over the long run.
These figures highlight the significant opportunity ahead. The share price is down 11.1% since February, offering a potential dip-buying opportunity to research.
Alphabet
Next up is Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). As the ticker symbols indicate, this is the parent company of Google and everything that entails (Google Search, Google Cloud, YouTube, Android, etc).
At $175, the share price is 15.4% lower than it was just a month ago. This puts the tech stock’s forward price-to-earnings (P/E) ratio at a cheap-looking 19 times. That’s way lower other ‘Magnificent Seven’ tech stocks and the wider Nasdaq index.
Why are the shares cheap? I think there are a couple of key concerns here. First, the US Department of Justice is pushing to break up Google. Accusing it of being a monopoly, it wants the tech giant to sell its web browser, Google Chrome and, potentially, Android. So this uncertainty’s hanging over the stock.
Another risk is that the majority of Alphabet’s profits stem from digital advertising on Google and YouTube. There’s rising concern that the US might dip into a recession. If so, this could impact Alphabet’s profits for a couple of quarters.
In my eyes though, the long-term positives outweigh the risks here. Analysts see the company growing revenue to around $480bn in 2027, up from $350bn last year. Earnings are also expected to grow double digits, giving a forward P/E multiple of just 15 for 2027.
Meanwhile, Alphabet’s robotaxi subsidiary, Waymo, carried out more than 4m driverless taxi rides last year. It plans to expand globally over the next decade, potentially disrupting traditional taxi services by replacing human drivers with autonomous vehicles.
Finally, Google’s a leader in the emerging field of quantum computing. Its new quantum chip, Willow, has achieved advances in quantum error correction, completing in under five minutes a computation that would take existing supercomputers 10 septillion years to complete.
This post was originally published on Motley Fool
