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, these types of Nasdaq 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, a great number of Nasdaq stocks have imploded as investors refocused their attention from future growth to current profits and cash flows. Throw in layoffs and shrinking spending across the tech industry, and it’s been a rough time in Silicon Valley.
However, there’s much more to Nasdaq stocks than just moonshot hypergrowth investments. The Nasdaq exchange, as it turns out, is home to a lot of highly profitable companies with steady businesses and strong prospects even in a potential economic recession. These seven Nasdaq stocks to buy and hold have what it takes to prosper in the coming years and decades.
| TXN | Texas Instruments | $154.34 |
| GOOG, GOOGL | Alphabet | $99.71 |
| INTC | Intel | $26.42 |
| XEL | Xcel Energy | $59.74 |
| PEP | PepsiCo | $174.61 |
| CSX | CSX Corporation | $27.50 |
| IDXX | Idexx Laboratories | $335.54 |
Texas Instruments (TXN)
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.
Analog semiconductors are also attractive because they are a slower-moving market. For a hot consumer product such as smartphones, a semiconductor design can become obsolete within a couple of years. This requires tons of R&D spending to stay at the front of the pack. Analog semiconductors, by contrast, have less competition and far longer lifecycles.
Texas Instruments has turned its robust and stable cash flows into a great shareholder return program. TXN stock offers a 3.2% dividend yield on top of its large annual share buybacks. With the stock down 18% over the past 12 months, shares are trading for just 17 times forward earnings.
Alphabet (GOOG, GOOGL)
The FAANG stocks have had a terrible 2022 as the former high-fliers have seen their valuation multiples collapse. Investors might want to avoid the whole category, given the terrible momentum right now. But for folks wanting to buy into the correction in the large tech companies, Alphabet (NASDAQ:GOOG, GOOGL) offers the best value today.
Alphabet’s hold over the search market remains unrivaled. The company’s ecosystem is hard to compete with. Between search, Chrome, email, Android, maps and countless other apps, Google simply has more data and more ways to reach consumers than any of its rivals. And, despite some economic weakness, the advertising business remains an absolute money printer right now.
Sure, there are some quibbles with Alphabet. The company spends heavily on its other bets like health care, quantum computing, artificial intelligence, self-driving vehicles and so on. Not all of these bets will pay off. But at least some of them will. That adds upside optionality to the core Google business. Meanwhile, shares are trading for just 16 times forward earnings after a 27% 12-month decline.
Intel (INTC)
It’s been an absolute year to forget for Intel (NASDAQ:INTC). The semiconductor giant has long held a dominant grip on chips for PCs and servers. Its leading market position has come under fire from a resurgent Advanced Micro Devices (NASDAQ:AMD), among other competitors. Throw in a brutal market for semiconductor stocks in general, and Intel shares have fallen to near 10-year lows. Understandably, some pundits are writing the eulogy for the once-great Intel. However, it’s far too early to cast Intel aside.
Demand for personal computers dropped a stunning 19.5% year over year in the third quarter. Simply put, everyone bought new computers during the pandemic. This pulled forward demand and led to a plunge in sales for 2022. However, this effect will fade with time. Sooner or later, computers wear out and people will want to upgrade or replace their existing units.
More broadly, Intel spends more than $15 billion annually on research and development. Its tech leadership position may waver from year to year but it isn’t going anywhere in the longer term. Additionally, the federal government’s new program to aid American semiconductor manufacturers will offer a huge boost to Intel specifically. Long story short, shares are a steal after falling nearly 50% over the past 12 months and now offer a tantalizing 5.8% dividend yield as well.
Xcel Energy (XEL)
Xcel Energy (NASDAQ:XEL) is a Minneapolis-based power utility. The company primarily sells electricity and natural gas to consumers. With a greater than $30 billion market capitalization, Xcel is one of the larger publicly traded American power utilities.
What’s the appeal of a power utility today? The sector is known for operating steady, recession-proof businesses. Electricity operators throw off a ton of cash and tend to hold up during downturns. There’s also a longer-term growth tailwind there with the adoption of electric vehicles, which will greatly boost electricity usage.
The knock on the utilities was that they were expensive. XEL stock made a new 52-week high as recently as September, bucking the overall market trend. However, with the surge in interest rates, utility stocks have plummeted over the past month, with XEL stock off nearly 23%. That has pushed the stock under 18 times forward earnings while offering a 3.3% dividend yield.
Investors think of the Nasdaq as being full of technology companies, but some more conservative income-generating companies like Xcel are attractive when looking for Nasdaq stocks to buy and hold.
Pepsico (PEP)
PepsiCo (NASDAQ:PEP) is an easy pick among Nasdaq stocks to buy and hold forever. That’s right, the maker of soda and snack foods is listed on the Nasdaq. Via its Frito-Lay business, PepsiCo has a huge business in junk foods, which offers substantial diversification from its beverage operations.
PepsiCo has grown its dividend for 50 years in a row. Given people’s addiction to fat, salt and sugar, it’s a good bet that PepsiCo will continue delivering the goods in the years to come as well.
PEP stock is never going to be the top individual performer in a portfolio over a short period of time. However, its steady long-term earnings growth and rising dividend payouts make it an attractive conservative holding within a broader group of stocks. And, with no signs of the bear market letting up, PEP stock is also something that is safer to buy now during the current doldrums.
CSX Corporation (CSX)
Railroad operator CSX Corporation (NASDAQ:CSX) is another firm that most people probably didn’t realize was on the Nasdaq. While railroads aren’t that glamorous today, they were one of the original growth industries in America. Railroad booms throughout the 1800s led to some of America’s first big bull markets and surges in economic growth.
Railroads remain vital today. They have much better per-mile efficiency than trucks, which is more important than ever as diesel prices surge. Also, there has been considerable progress in electrifying and automating rail transport. This improves economics for the industry while lowering its environmental footprint.
The railroads will see soft earnings in 2023 given current economic conditions. But the long term is bright as manufacturing returns to the United States thanks to companies rethinking their supply chains. This should boost rail volumes going forward. Meanwhile, CSX stock is now selling for just 13 times forward earnings.
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.
Idexx has been riding a massive tailwind in recent years as people spend more and more money on their pets. Increasingly, many people have waited longer to have kids and have developed closer ties with their cats and dogs instead. This pet adoption frenzy hit high gear during the pandemic when people were lonely and stuck at home.
IDXX stock was one of the past decade’s unheralded stars. Shares shot up more than 1,000% between 2012 and 2021. However, IDXX stock is now off by more than half from its highs as pet adoption rates have slowed and people worry a recession will hurt consumer spending. However, the long-term trend toward pet ownership isn’t changing. Idexx is a dominant player in its industry and remains comfortably profitable today. Shares will recover and roar to new heights during the next bull market.
On the date of publication, Ian Bezek held a long position in INTC and TXN stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.