Is It Time to Buy NASDAQ Stocks on the Dip?

September 10, 2020
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The NASDAQ Composite Index (COMP) is down -7.59% over the last five days of trading. After a strong rally this year, some investors fear that the bull run has come to an end.

However, for investors who still have confidence in the strength of the market, the NASDAQ is one of the best places to invest. It’s a heavily tech-weighted index and is home to some of the largest companies in the world.

The index is still up 36.38% in the year to date, and it returned to growth on Wednesday afternoon. See why it’s worth buying NASDAQ stocks on the dip.

There’s Still Big-Tech Strength to Leverage

Stocks fell over the past week, largely because of flaring China-U.S. trade tensions. Chip stocks declined, with investors fearing that tariffs and government interference could disrupt growth in the industry.

The Coronavirus Pandemic has also played a part in the decline. The health crisis creates uncertainty among consumers and investors. But even if some of the smaller technology companies see weaker stocks in the meantime, the largest are likely to see growth before the end of the year.

Microsoft (NASDAQ: MSFT) is a perfect example. The stock is down -2.72% over the last five days, but it closed in the green on Wednesday. The company has recently reported better than expected earnings and revenue growth. It is preparing to release its next-generation XBOX console at the end of the year, which could drive confidence in the stock.

Apple (NASDAQ: AAPL) is in a similar position. The company recently split its stock, making shares more affordable and more attractive. Apple is preparing to release a 5G iPhone this year, which is big news for its smartphone business. The 5G iPhone is expected to drive holiday-season revenue. It will be a significant technological leap and could convince older handset owners to finally upgrade. Apple is down -2.95% over the previous five days, effectively discounting the stock today.

Other tech-related companies like Nvidia (NASDAQ: NVDA), Tesla (NASDAQ: TSLA), and Advanced Micro Devices (NASDAQ: AMD) are also worth considering during this market rout.

An Upside is Likely

While the economic recession and Coronavirus could impact earnings over the next 12 months, the eventual upside should be significant.

Before the health crisis, stocks were at their highest levels in years. That inherent strength still exists. Today’s discounted prices could represent the perfect opportunity to buy some of the strongest traditional growth stocks.

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