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4 Nasdaq Stocks with Great Momentum to Buy Now

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The Nasdaq has been consistently moving down since mid-July. There was a rapid decline from Aug 17 - 25, when the index slumped 10.7%. A shaky rebound could last only til mid-September, as the index is again suffering a nosedive in recent days. Since Sep 17, Nasdaq has plunged 7.6%.

On Monday, Nasdaq's 50-day moving average fell below the 200-day moving average, indicating a death cross. A dramatic selloff in biotech stocks had adversely affected the index, eventually dragging it into negative territory for the year. Meanwhile, renewed worries about economic growth in China and uncertainty about the timing of a rate hike has kept volatility alive in the broader markets.

With volatility persisting in the market and biotechs poised to take a hit on price gouging concerns till election year, the index may not enjoy consistent gains in the near term. However, all is not lost as major players in the technology sector remain fundamentally strong. So it will be a prudent idea to invest in stocks from this sector that has shown an upward trend in price.

Biotech's Nosedive

The Nasdaq Composite Index extended its losing streak for the sixth consecutive day on Tuesday due to continuing slump in biotech stocks. Beaten-down biotech stocks dragged the iShares Nasdaq Biotechnology (IBB) down 0.6% on Tuesday. In fact, IBB has plunged 18.1% so far in September as investors continue to liquidate biotech stocks. The major catalyst behind this drop appears to be U.S. Democratic presidential hopeful Hillary Clinton's plans to prevent "price gouging" in the specialty drugs market.

Last week, Clinton tweeted that "Price gouging like this in the specialty drug market is outrageous." Her announcement came in after she came across an article in The New York Times about a drug whose price was raised from $13.50 a tablet to $750. This has raised concerns about the pricing and affordability of prescribed drugs.

Clinton's vow to deal with prohibitive drug prices hit biotech stocks hard. Biotech companies may find it immensely difficult to justify the elevated drug prices. Almost 72% of U.S. citizens find drug costs unreasonable, according to the Aug 2015 Kaiser Health Tracking poll.

Broader Market Concerns

Weak Chinese economy has raised concerns about global economic growth, which eventually dampened sentiment in the U.S. markets. China disappointed markets following drop in profits of Chinese industrial companies, lower-than-expected investment and factory output, dismal manufacturing data, significant trade gap and decline in foreign exchange reserves among other dismal reports. Asian Development Bank's (ADB) weak economic outlook for China also dented investor sentiment.

Meanwhile, investors remained concerned about the timing of the first rate hike in nearly a decade. Slowdown in Chinese economy had compelled the policymakers to delay a rate hike in September. However, Fed Chairwoman Janet Yellen indicated that the lift-off option is very much on the table later this year.

Nevertheless, even though investors have factored in the likelihood of a rate hike this year, weak economic data from China continues to create volatility in the financial markets. The fear-gauge CBOE Volatility Index (VIX) was at 26.83 on Tuesday. The fear gauge index continues to hover above 20, indicating high volatility.

Tech Stocks to the Rescue: 4 Momentum Picks

In the midst of market volatility and plunge in biotech stocks, some favorably-ranked technology shares continue to remain strong. In the last one month when the choppy ride in the stock markets dented investor sentiment, the Technology Select Sector SPDR XLK is one of the few sectors to have declined the least. Thus, stocks gaining amid the uncertainty indicate their momentum strength. Hence, it will be a wise decision to invest in such stocks from the technology sector, which form an integral part of the Nasdaq.

Our selection is also backed by Momentum Style Scores of 'A' or 'B' and Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy). With our new style score system we have identified the key statistics to pay close attention to and which stocks might be the best for momentum investors in the near term.

2U, Inc.TWOU is an education technology company that provides cloud-based software-as-a-service solutions. TWOU holds a Zacks Rank #2 (Buy) and has a Momentum Style Score of 'A'. TWOU has gained 2.9% and 13.5% in the last one month and three months, respectively.

Callidus Software Inc.CALD provides enterprise software and related services to telecommunications, insurance, banking and technology markets worldwide. CALD holds a Zacks Rank #2 (Buy) and has a Momentum Style Score of 'A'. CALD has gained 3.9% and 6.8% in the last one month and three months, respectively.

Ceragon Networks Ltd.CRNT is a leading provider of high-capacity wireless backhaul solutions for cellular and fixed wireless operators. CRNT holds a Zacks Rank #1 (Strong Buy) and has a Momentum Style Score of 'B'. CRNT has gained 7.7% and 49.5% in the last one month and three months, respectively.

Envivio, Inc.ENVI is engaged in providing software-based IP video processing and distribution solutions. ENVI holds a Zacks Rank #1 (Strong Buy) and has a Momentum Style Score of 'B'. ENVI has gained 122% and 105.5% in the last one month and three months, respectively.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

CERAGON NETWRKS (CRNT): Free Stock Analysis Report

ENVIVIO INC (ENVI): Free Stock Analysis Report

CALLIDUS SOFTWR (CALD): Free Stock Analysis Report

2U INC (TWOU): Free Stock Analysis Report

SPDR-TECH SELS (XLK): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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