The Nasdaq is known for high-flying growth stocks, not necessarily buy-and-hold candidates. Electric vehicles, biotechnology, social networking stocks, cloud software companies and the like. These are the sort of companies that can go up five- or 10-fold if their businesses find sustained market success. On the other hand, their stocks can easily end up losing most of their value if anything goes wrong and/or there is a broader correction in the tech sector.
Over the past year, the Nasdaq is down 33.5%, with many of the individual components suffering far greater losses as investors refocused their attention from future growth to current profits and cash flows. It feels as though investors are hyper-focused on short-term losses rather than long-term potential, such as where a company may be in, say, 2030.
On the bright side, this year’s bear market has created some stellar opportunities for long-term investors looking for Nasdaq stocks to buy and hold. Below are seven of them.
Nasdaq Stocks to Buy and Hold: Texas Instruments (TXN)
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Texas Instruments (NASDAQ:TXN) is an analog semiconductor company. Analog semiconductors are vital because they turn real-world information such as weather conditions into data. The ability to sense and process external information is crucial for enabling cutting-edge technologies such as autonomous driving, remote monitoring and internet of things applications.
Semiconductor shortages in 2021 led to high prices and record profits across the industry. The boom has turned into a bust this year, however, as demand for consumer electronics such as televisions and laptops has dropped significantly from peak 2021 levels. Texas Instruments has been able to sidestep much of this cyclical pain, though, since its analog chips tend to go into slower-moving industrial markets rather than hot consumer products.
Texas Instruments is also a cash flow machine. Management is laser-focused on the metric, noting in a recent presentation: “We believe that growth of free cash flow per share is the primary driver of long-term value.”
This focus has worked out well for shareholders. Over the past 10 years, TXN stock has averaged a 20.6% return and it offers a 3.1% dividend yield.
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Chinese tech stocks have been an abject failure over the past year. Investors have lost a ton of money in the sector, and many traders have understandably thrown in the towel. Obviously, Chinese securities carry elevated political and financial risks right now.
That said, China still has more than a billion people and most of them are going to shop online. JD.com (NASDAQ:JD) is one of the country’s most promising e-commerce services. It has built a reputation for higher product quality standards than its rivals, which has been a big selling point in a market that has a problem with knock-off and counterfeit goods. In addition, JD has invested heavily in logistics, which has powered fast and reliable delivery schedules.
JD stock is now down nearly 60% from its 2021 peak. This has left shares trading at just 16 times forward earnings. Meanwhile, the company’s market capitalization is down to $71 billion. That’s a pretty small figure for a company whose annual sales are expected to top $170 billion in 2023.
As long as Chinese stocks as a group remain available to American investors, JD stock should be one of the leaders in its category.
Nasdaq Stocks to Buy and Hold: Interactive Brokers (IBKR)
Interactive Brokers (NASDAQ:IBKR) is a leading discount brokerage firm. The company services a wide variety of customers ranging from small retail accounts to registered financial advisors to hedge funds. Interactive Brokers has a global reach, offering services to investors in dozens of countries. It also offers a vast array of tradable markets, including Europe, Asia, and even emerging markets such as Mexico, which are all available within a single trading account.
The firm is set to benefit dramatically from higher interest rates. For starters, it gets to charge much higher interest rates on margin loans thanks to rising rates. The cost of a U.S. dollar margin loan has gone up from 1.6% to 5.3% at Interactive in recent months thanks to the ongoing Federal Reserve rate hikes. Additionally, volatile markets tend to lead to more trading activity, which can boost profitability.
IBRK stock isn’t just a near-term interest rate play, however. The company has long-term appeal. Founder Thomas Peterffy is a visionary within the brokerage services industry and has built his company to thrive on a generational timeframe. In addition, the company’s focus on low costs and excellent trading execution has led to the firm having a stellar reputation with professional traders. As the brokerage industry continues to consolidate, Interactive should be one of the biggest winners.
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If you look through a list of Nasdaq stocks, there are a surprisingly high number of firms that have nothing to do with technology. Take PepsiCo (NASDAQ:PEP), for example. The soft drink and snack foods maker is one of the safest and most reliable blue chip stocks listed on the Nasdaq.
PepsiCo will rarely wow investors with an amazing performance in any given year. Over time, however, the company’s shares have steadily marched upward, with an average annual return of 12% over the past decade. The company is also a dividend machine. It has increased its annual dividend for 50 years in a row, putting it among the elite Dividend Kings.
Some investors might be put off by the fact that PEP stock is trading at nearly 25 times forward earnings. That’s fairly expensive, especially in a bear market. However, shares are worth the price, especially for long-term investors. Pepsico delivers reliable earnings year in and year out, and it pays investors an increasingly large dividend as well.
Nasdaq Stocks to Buy and Hold: Constellation Energy (CEG)
Power utility Constellation Energy (NASDAQ:CEG) is another quality, sleep-well-at-night Nasdaq stock. The firm is one of the larger publicly traded electricity utilities with a market capitalization of nearly $30 billion.
The company’s claim to fame is its large capacity for nuclear power generation. Nuclear power had been viewed as a fading asset in recent years due to high costs, regulatory pushback and a preference for other renewables. However, solar and wind have run into some pricing and capacity issues of their own. Meanwhile, the world is facing severe electricity generation issues in the wake of Russia’s invasion of Ukraine.
This has created something of a nuclear renaissance. Expect more research, investment, subsidies, and so on to go into nuclear going forward as policymakers increasingly look to nuclear as a “bridge” capacity generator between fossil fuels and green renewables. The Inflation Reduction Act, for example, provided significant subsidies to carbon-free power production, which includes nuclear.
Constellation shares just started trading in early 2022, as it was spun off from another power utility. Shares are up more than 130% since then. Expect CEG stock to continue rallying as more investors discover this unique clean energy utility.
CSX Corporation (CSX)
Railroad operator CSX Corporation (NASDAQ:CSX) is another firm that most people probably didn’t realize was on the Nasdaq. Railroads are an interesting asset class. They were the original American growth stocks. American railroad booms led to several bouts of market euphoria in the 1800s. Over a long enough time horizon, however, every new technology becomes a commodity product.
Railroads have enjoyed a revival in recent years. Much of this is due to rising fuel prices. They have much better per-mile efficiency than trucks, which is a key consideration given soaring fuel prices. Also, there has been considerable progress in electrifying and automating rail transport. This improves economics for the industry while lowering its environmental footprint.
Make no mistake about it, 2023 is going to be a rough year for railroads, including CSX. We’re likely to see big drops in sales of consumer durable goods such as appliances, building materials, automobiles, and so on. This means less cargo business for the rails. Over the longer-term, however, railroads are the best way to move large amounts of goods around, and operators like CSX have great profit margins thanks to local monopolies in many of the markets they serve.
After a 20% decline this year, CSX stock now trades for just 15 times forward earnings.
Nasdaq Stocks to Buy and Hold: Idexx Laboratories (IDXX)
Idexx Laboratories (NASDAQ:IDXX) is a life sciences company focused on animal health. It primarily offers solutions for companion animals, i.e., pets. Idexx has three main lines of business. It distributes in-clinic testing and screening products that veterinarians can use in their offices. It has a testing service where pet owners and vets can send samples to a network of Idexx-affiliated laboratories for processing. And there’s Idexx’s software business, which offers patient and practice management and client outreach for veterinarian offices.
IDXX stock was one of the past decade’s unheralded winners. Shares soared more than 1,000% between 2012 and 2021. In 2022, Idexx has fallen by nearly 42%. However, the same factors that powered the stock’s 10-fold rally over the past decade persist. Namely, people are increasingly viewing their pets as family. As folks have tended to have fewer kids in recent years, it has freed up more money and attention for animal companions. The pandemic accelerated this trend as people were stuck at home and looking for company.
IDXX stock sold off as the pandemic-induced animal adoption boom came to an end. But the longer-term trend hasn’t changed, and shares will be back to full health in due time.
On the date of publication, Ian Bezek held a long position in TXN stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.