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3 Nasdaq 100 Stocks to Buy Hand Over Fist in January

3 Nasdaq 100 Stocks to Buy Hand Over Fist in January
Written by publishing team

Did you know that heavy technology Nasdaq 100 actually lagged behind Standard & Poor’s 500 In 2021? Sure, the total return of 27.5% for the Nasdaq 100 was pretty good, but it wasn’t enough to capture the total return of 28.7% for the S&P 500. It was a rare underperform for the big-cap technology, which has nearly doubled total market returns over the past five years. .

It is also notable that within the Nasdaq, some of the more competitive long-term winners have underperformed even more in the past year, making them good candidates for market-beating returns in 2022. These include e-commerce pioneers Amazon (NASDAQ: AMZN) And JD.com (NASDAQ: dinars), along with Great Communications T-Mobile (NASDAQ: TMUS).

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Amazon and JD.com Will Have Easier Companies in 2022

Across the board, e-commerce stocks have found that 2021 will be more difficult than 2020. This should come as no surprise. Their growth surged during the early stages of the COVID-19 pandemic as people who had been avoiding public places demanded more of the goods they needed online. But a year later, those periods of rapid growth offer difficult comparisons, and as global economies reopen and people ease up on social distancing amid the rollout of vaccines, e-commerce growth rates have slowed.

Although the Motley Fool heralds the virtues of long-term investing, the truth is that many investors feel the need for companies in their portfolios to outperform each year or quarter, and for those who see investing in that light, the e-commerce sector, With its slowing growth, it was a “no-go” place in 2021.

But looking at 2022 companies will get easier again, and I like the competitive advantages of Amazon in the US and JD.com, which is listed on the Nasdaq 100 even though it is a Chinese company.

Amazon’s overall top-line growth has been disappointing in the past year, due to both the aforementioned challenging companies and supply chain pressures that reduced their growth and increased their costs. After announcing 2020, Amazon stock is up just 2.4% in 2021, behind major indexes and its FAANG peers.

However, Amazon is more of a conglomerate than an e-commerce player these days. Amazon Web Services and digital advertising segments with lower revenue and higher profits have grown by leaps and bounds. AWS’ growth is already accelerating, as has Amazon’s “other” category, which brings most of its revenue from digital advertising.

Recent economic growth numbers in the US have been strong, so these two sectors should continue to perform well as more companies migrate to cloud computing and more advertising dollars pour into online and streaming platforms.

In the meantime, as Amazon’s e-commerce sector has faced difficult businesses in the past year, these will become a lot easier in 2022. Hopefully, supply chain issues will diminish as well, which will ease the pressure on profitability. Look for Amazon’s top-line growth to accelerate this year as these trends solidify.

JD.com looks relatively good in the new era of Chinese e-commerce

The Chinese government’s regulatory crackdown last year has sent nearly all Chinese tech stocks tumbling, and JD.com was no exception: It tumbled more than 20% in 2021, and is now trading 35% below all-time highs.

However, as Beijing looks to rein in the tech sector on a large scale, JD.com may already be helped competitively through the new regulations. For example, its competitor Ali Baba (NYSE: Alibaba) It has traditionally used its market-leading scale to force brands into exclusive deals. But state regulators recently banned the practice, so JD.com is now able to compete on a more level playing field.

One can already see that this start positively affects JD.com’s results. In the last quarter, it showed surprising strength, given China’s economic headwinds and global supply chain issues. Revenue grew 25.5%, with product revenue up 22.9% and services revenue up 43.3%. That was much better than Alibaba’s 16% growth (excluding its acquisition of Sun Art Retail). Alibaba’s overall results were boosted by 33% in the cloud segment, which JD.com does not have.

Whereas JD.com has traditionally been strong in electronics and other high-end products, it now competes more effectively in general merchandise, possibly due to new regulations and enforcement. Revenue from the general merchandise segment grew 29.3% last quarter — above the company’s overall growth rate and above Alibaba.

Unlike Alibaba, JD.com has made the huge investments needed to own the entire logistics infrastructure. Those expenses are paying off — and delivery and inventory control could become major differentiators in Chinese e-commerce now that exclusivity and predatory pricing have been effectively banned. JD.com is also driving logistics revenue growth above the current trend from third parties — its top streak in this segment grew 53% in the third quarter. JD.com’s marketing services to merchants grew by a solid 35%.

If Chinese stocks rebound again in 2022, JD.com may be the one to bounce back better.

T-Mobile should gain market share in the 5G era

The telecom sector also had a rough year in 2021. In 2020, it saw a spike in broadband and wireless subscriptions, but growth slowed last year. Investors may fear the markets for these tech utilities will become saturated, and worry that major players will have to engage in price wars to attract customers.

But that shouldn’t worry T-Mobile, which sold out with the segment and fell 14% in 2021. Its operating results have been solid, and for a long time it’s been “taking a stake” throughout its corporate life. Since describing itself as an “un-carrier” about a decade ago, T-Mobile has been rocking the US wireless industry with low-priced plans and customer-friendly features in an industry completely unknown to them.

Now, T-Mobile has another important advantage: it runs the best 5G network. Its 2020 acquisition of Sprint brought key mid-band spectrum to 5G, which offers game-changing speeds, as opposed to low-band, but solid-band, where the high-frequency millimeter-wave spectrum is short.

As of December, T-Mobile was bringing mid-range 5G to a coverage area of ​​more than 200 million people — a feat that its competitors will not match for another two years. By then, T-Mobile expects to have 300 million people in its 5G coverage area, which will extend to more rural areas of the country.

These rural areas account for about 40% of the US population, and T-Mobile has so far had much weaker penetration into those markets than its peers. T-Mobile also has a low market share among enterprise accounts, but more of those could switch to it due to its superior 5G capabilities.

As more customers acquire 5G-enabled phones this year, and T-Mobile nears the end of its long integration, look for an “un-carrier” to win its share of net customer additions in 2022.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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