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.
Investing in Nasdaq 100 stocks isn’t just about picking big names - it’s about finding the right ones, and that’s where StockStory comes in. That said, here are three Nasdaq 100 stocks that don’t make the cut and some better choices instead.
Workday (WDAY)
Market Cap: $44.86 billion
Born from the vision of PeopleSoft founders after Oracle's hostile takeover of their previous company, Workday (NASDAQ: WDAY) provides cloud-based software for financial management, human resources, planning, and analytics to help organizations manage their business operations.
Why Is WDAY Not Exciting?
- The company has faced growth challenges as its 13.6% annual revenue increases over the last two years fell short of other software companies
- Estimated sales growth of 10.1% for the next 12 months implies demand will slow from its two-year trend
- Operating margin expanded by 4.8 percentage points over the last year as it scaled and became more efficient
Workday’s stock price of $184.76 implies a valuation ratio of 4.1x forward price-to-sales. To fully understand why you should be careful with WDAY, check out our full research report (it’s free).
Palo Alto Networks (PANW)
Market Cap: $329.9 billion
Founded in 2005 by security visionary Nir Zuk who sought to reimagine firewall technology, Palo Alto Networks (NASDAQ: PANW) provides AI-powered cybersecurity platforms that protect organizations' networks, clouds, and endpoints from sophisticated threats.
Why Are We Cautious About PANW?
- Gross margin of 70.4% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
- Operating margin fell by 7.4 percentage points over the last year as it prioritized growth over profits
Palo Alto Networks is trading at $403.13 per share, or 22.9x forward price-to-sales. Check out our free in-depth research report to learn more about why PANW doesn’t pass our bar.
Baker Hughes (BKR)
Market Cap: $55.59 billion
Tracing lineage to a 1907 cable tool drill bit patent, Baker Hughes (NASDAQ: BKR) provides equipment and services for oil and gas drilling, production, and transport.
Why Does BKR Fall Short?
- Annual sales growth of 6.3% over the last five years lagged behind its energy upstream and integrated energy peers as its large revenue base made it difficult to generate incremental demand
- Gross margin of 22.3% reflects its high production costs and unfavorable asset base
At $56.20 per share, Baker Hughes trades at 20.6x forward P/E. Dive into our free research report to see why there are better opportunities than BKR.
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