Have the bears gone into hibernation? This seems to be the case with the Nasdaq Composite Index – for now, at least.
The Nasdaq bear market that started only a few months ago appears to be over. Many investors consider a bear market to be over when stocks are no longer down 20% or more. In recent days, the Nasdaq composite index has exceeded this threshold.
Some would say that the Nasdaq is currently in a bull market. The index is up more than 20% since hitting a low on June 16, 2022. Others might prefer to wait before declaring a bull market to ensure recent gains don’t evaporate.
Here are three stocks to buy in a new Nasdaq bull market — whether we’re already in one or it’s just around the corner.
Apple (AAPL -0.09%) ranks among the top stocks contributing to the market rebound. It is the largest component of the Nasdaq composite index and the S&P500. And Apple has been on a roll in recent weeks.
If the Nasdaq bull market picks up momentum, it’s likely that Apple will continue to play a big role in the momentum. There are several good reasons to believe that the giant tech stock will indeed continue to rise.
On the one hand, Apple expects revenue growth to pick up speed in the third quarter of 2022. The company doesn’t believe the supply chain issues that have caused problems so far this year will as important. Apple could also have a particularly strong fourth quarter after the planned launch of the iPhone 14 in September.
More importantly, however, Apple’s long-term prospects remain bright. The company’s iPhone ecosystem continues to attract customers. Apple also has growth opportunities in augmented reality and increased 5G adoption.
The liquidation of growth stocks has hit MercadoLibre (MELI -2.67%) particularly hard. The e-commerce stock plunged as much as 68% below its peak at one point. However, MercadoLibre is now on a tear.
Despite macroeconomic headwinds, MercadoLibre posted strong results in the second quarter. It blew analysts’ revenue and earnings estimates with net revenue up nearly 57% year-over-year.
MercadoLibre’s e-commerce opportunity in Latin America continues to grow. The company is taking advantage of this opportunity by improving its online functionality and reducing delivery times. Fintech offers another important and growing market for MercadoLibre. Many people in Latin America do not have full access to traditional financial services.
MercadoLibre chief financial officer Pedro Arnt said on the company’s second-quarter call that the ad is “only beginning to scratch the surface of its potential.” Advertising is not only a driver of revenue growth with the e-commerce platform; the company is also testing ways to support advertising on its Mercado Pago digital payment platform.
3. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX -0.83%) didn’t need a rebound. Unlike most stocks, Vertex has never dipped into negative territory this year. Biotechnology stock is up more than 35% so far in 2022.
Even if the Nasdaq bull market has no legs, Vertex should be a great stock to buy. The company’s activity is not greatly affected by inflation or rising interest rates. Vertex has a monopoly on treating the underlying cause of cystic fibrosis (CF). No other potential rival is even beyond phase 2 clinical testing at this point.
Vertex certainly has plenty of room to grow in the CF market. However, it has other opportunities that could generate even stronger growth.
The big biotech plans to file for regulatory approval of exa-cel starting later this year. This gene-editing therapy, developed with a partner CRISPR therapeutics, has the potential to cure sickle cell disease and transfusion-dependent beta-thalassemia. Vertex’s pipeline also includes several other promising programs.
Keith Speights holds positions at Apple, MercadoLibre and Vertex Pharmaceuticals. The Motley Fool holds and recommends Apple, CRISPR Therapeutics, MercadoLibre and Vertex Pharmaceuticals. The Motley Fool recommends the following options: $120 long calls in March 2023 on Apple and short calls $130 in March 2023 on Apple. The Motley Fool has a disclosure policy.