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While the Nasdaq 100 (^NDX) is filled with cutting-edge technology and consumer companies, not all are on solid footing. Some are dealing with declining demand, high costs, or regulatory pressures that could limit future upside.
With rapid innovation comes rapid change, and StockStory is here to help you identify which Nasdaq 100 stocks are still worth your money. Keeping that in mind, here is one Nasdaq 100 stock that has huge potential and two that may face some trouble.
Two Stocks to Sell:
Warner Bros. Discovery (WBD)
Market Cap: $22.61 billion
Formed from the merger of WarnerMedia and Discovery, Warner Bros. Discovery (NASDAQ:WBD) is a multinational media and entertainment company, offering television networks, streaming services, and film and television production.
Why Do We Avoid WBD?
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Products and services have few die-hard fans as sales have declined by 4.9% annually over the last two years
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Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 17% annually
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Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Warner Bros. Discovery is trading at $9.16 per share, or 166x forward P/E. Read our free research report to see why you should think twice about including WBD in your portfolio, it’s free.
Regeneron (REGN)
Market Cap: $61.81 billion
Founded by scientists who wanted to build a company where science could thrive, Regeneron Pharmaceuticals (NASDAQ:REGN) develops and commercializes medicines for serious diseases, with key products treating eye conditions, allergic diseases, cancer, and other disorders.
Why Does REGN Give Us Pause?
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Sizable revenue base leads to growth challenges as its 6.7% annual revenue increases over the last two years fell short of other healthcare companies
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Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 12.3 percentage points
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Eroding returns on capital suggest its historical profit centers are aging
Regeneron’s stock price of $586 implies a valuation ratio of 14.6x forward P/E. Check out our free in-depth research report to learn more about why REGN doesn’t pass our bar.
One Stock to Buy:
Axon (AXON)
Market Cap: $56.71 billion
Providing body cameras and tasers for first responders, AXON (NASDAQ:AXON) develops technology solutions and weapons products for military, law enforcement, and civilians.
Why Will AXON Beat the Market?
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Unit sales averaged 32% growth over the past two years and imply healthy demand for its products
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Free cash flow margin expanded by 20.3 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
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Improving returns on capital suggest its past investments are beginning to deliver value