Nasdaq stocks have taken a severe beating in 2022. Interest rate hikes have pushed investors toward the safety of blue chip stocks, squeezing their lofty valuations to more reasonable levels.
As we write, the Nasdaq 100 index was in bear-market territory, about 22% year-to-date (YTD). However, lower sky-high valuations now mean more attractive buying opportunities for investors with a long-term mindset.
While some analysts expect a summer rally, others predict a stock market “melt-up,” or a short period of irrational buying that precedes a significant collapse, ending the bull market. Therefore, amid all the doom and gloom talk on the Street, investing in Nasdaq stocks requires investors to sift through this noise and focus on the fundamentals.
Investors who can navigate the current volatility on the Street are primed to find great bargains in this bear market. With that information, here are seven Nasdaq stocks to buy that could generate double-digit gains for investors in 2022.
Nasdaq Stocks: Broadcom (AVGO)
Broadcom (NASDAQ:AVGO) is the fourth-largest chipmaker stock in the world by market capitalization (cap). It produces a wide range of semiconductor and infrastructure software solutions. Bulk of revenues come from wireless chips used in high-end smartphones.
The semiconductor giant released Q2 results on May 26. Revenue increased 23% year-over-year (YOY) to $8.1 billion. Non-GAAP diluted (adjusted) earnings per share (EPS) came in at $9.07, up from $6.62 in the prior-year quarter.
Cash and equivalents ended the quarter at $9 billion. Broadcom also ended 2021 with a record backlog of $14.9 billion, suggesting highly reliable cash flow.
In May, the company announced the acquisition of VMware (NYSE:VMW) for $61 billion. VMware boasts steadily growing cloud management and infrastructure solutions that could enhance Broadcom’s business. Investors are excited about how this transaction could help both the top and bottom lines.
AVGO stock has declined more than 15% YTD. It currently generates a generous 2.9% yield. Shares are trading at 16.2 times forward earnings and 8.6 times sales. The 12-month median price forecast for AVGO stock stands at $700.
CoStar Group (CSGP)
CoStar Group (NASDAQ:CSGP) offers an online marketplace for commercial real estate with detailed analytical information on roughly 5 million commercial real estate properties. Its brands include CoStar Suite, Apartments.com, LoopNet and BizBuySell.
The real estate platform announced Q1 metrics on Apr. 26. Revenue increased 13% YOY to $516 million. Adjusted EPS came in at 31 cents, up 15% from 27 cents in the prior-year quarter. Cash and equivalents ended the quarter at $3.9 billion.
Wall Street noted that it was the best sales quarter for the company. Net new bookings increased 31% YOY to $68 million.
Apartments.com saw a 36% sequential increase in sales, while the CoStar Suite grew 15% YOY. The company anticipates 11% YOY revenue growth for the current quarter. Management also projects full-year revenue to reach $2.15 billion to $2.17 billion.
So far in 2022, CSGP stock has lost close to a fourth of its value. Yet, it still has a premium valuation at 55.9 times forward earnings and 11.3 times sales.
Therefore, further short-term volatility is still possible in CSGP shares. 12-month median price forecast for CoStar Group stock is at $76.
Nasdaq Stocks: Costco Wholesale (COST)
Costco Wholesale (NASDAQ:COST) operates the second-biggest warehouse club retail chain in the U.S., boasting 830 membership warehouses worldwide. Its value proposition relies on bulk-size products at affordable prices.
The warehouse club chain announced Q3 results on May 26. Revenue increased 16% YOY to $51.6 billion. Despite cost pressures, diluted earnings per share went up to $3.04, up from $2.75 in the same quarter last year. Cash and equivalents ended the quarter at $11.2 billion.
Analysts noted that 28% of sales growth came from the rising price of gasoline. Comparable-store sales accounted for 14.9% of the revenue growth.
The warehouse club boasts a loyal customer base, having grown its membership households 6% YOY to 64.4 million. In fact, membership renewal rates stand at an impressive 90% rate worldwide. Due to inflationary pressures, members will likely continue to choose Costco over other stores.
So far in 2022, COST stock has fallen 17%. Shares are trading at almost 30 times forward earnings and 0.9 times sales. The 12-month median price forecast for Costco stock stands at $555.
Enphase Energy (ENPH)
Energy technology giant Enphase Energy (NASDAQ:ENPH) provides home energy management solutions. Its micro-inverter technology offers solar generation and storage services over a single platform. InvestorPlace.com readers are likely to know that “a micro-inverter is a small version of an inverter, converting DC to AC power from an individual panel.”
The renewable energy company issued Q1 results on April 26. Revenue increased 46% YOY to a record of $$441.3 million. Adjusted earnings came in at 79 cents per diluted share, up from 56 cents in the prior-year quarter. Cash and equivalents ended the quarter at $1.1 billion.
Unit shipments of its micro-inverter systems grew by 16% YOY. Meanwhile, energy storage systems soared 187% YOY to the current capacity of 120.4 megawatt-hours.
In addition, Enphase reported a robust 40% gross margin, one of the highest among its peers. Management currently anticipates revenue to increase at least 55% YOY in the current quarter.
So far in 2022, ENPH stock has returned more than 12%. However, valuation levels still look stretched, with the stock trading at 48.3 times forward earnings and 15.8 times sales. The 12-month median price forecast for Enphase stands at $228.
Nasdaq Stocks: PepsiCo (PEP)
PepsiCo (NASDAQ:PEP) is the name in global savory snacks and the second-largest carbonated soft drink manufacturer. Its global brands like Pepsi, Lay’s and Gatorade are usually consumed at home, making the company remarkably resilient during economic downturns.
The food giant announced Q1 results on April 26. PepsiCo generated $16.2 billion in net revenue, up 9.3% YOY. It also recorded $1.29 in core EPS during the quarter, representing a 7% YOY increase in constant currency. Cash and equivalents ended the quarter at $6.7 billion.
Despite ongoing price hikes, sales volume grew 3% in its convenient foods and 6% in its beverages segments. Furthermore, management raised the fiscal year 2022 guidance for revenue growth to 8%.
PepsiCo is set to become a Dividend King at the end of June, while the stock currently generates a 2.78% dividend yield.
PEP shares have declined around 4% YTD. The stock is trading at 24.5 times forward earnings and 2.8 times sales. The 12-month median price forecast for PepsiCo stock is at $187.
Trade Desk (TTD)
Trade Desk (NASDAQ:TTD) is a leading name in the targeted advertising space for digital ads. Its cloud-based platform allows ad buyers to purchase space on websites, podcasts, or connected TV. Moreover, its demand-side platform allows customers to manage their data-driven digital advertising campaigns.
The ad specialist released Q1 metrics on May 10. Revenue increased 43% YOY to $315 million. Adjusted earnings came in at 21 cents per share, up from 14 cents in the prior-year quarter. Cash and equivalents ended the period at $844 million.
Customer retention remained over 95% during the quarter. In addition, the company is set to launch Unified ID 2.0, an open source ID framework. Analysts expect it to enhance consumer privacy and transparency.
So far in 2022, TTD stock has plunged 42%. Yet, shares still don’t necessarily look cheap at 54 times forward earnings and 19.5 times sales.
Therefore, we could see more short-term choppiness in Trade Desk stock. The 12-month median price forecast for TTD stock stands at $80.
Nasdaq Stocks: Ulta Beauty (ULTA)
Ulta Beauty (NASDAQ:ULTA) is the largest specialized beauty retailer stateside. It offers makeup, fragrances, skincare, hair care products, plus bath and body items.
The beauty store chain announced Q1 figures on May 26. For the quarter ended on Apr. 30, revenue jumped 21% YOY to $2.35 billion. Diluted EPS soared 54% to $6.30, compared to $4.10 a year ago. Cash and equivalents ended the quarter at $654.5 million.
Coined as “the Lipstick Effect,” beauty brands may perform better than anticipated during economic downturns. Indeed, Ulta’s Q1 in-store traffic jumped 10%, driving an 18% increase in comparable sales.
Moreover, Ulta’s partnership with Target (NYSE:TGT) helped boost top-line growth. Following the installation of its mini stores at 100 Target locations, the company anticipates adding more than 250 more stores in 2022.
ULTA stock is trading flat for the year. Shares look fairly valued at 18.9 times forward earnings and 2.2 times sales. The 12-month median price forecast for Ulta beauty stock is at $475.
On the date of publication, Tezcan Gecgil 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.