1 Nasdaq 100 Stock on Our Watchlist and 2 We Avoid

The Nasdaq 100 (^NDX) is home to some of the biggest success stories in tech and growth investing. However, certain stocks in the index face challenges like profitability concerns, rising costs, or shifts in market trends.

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 is one Nasdaq 100 stock driving the future of tech and two best left off your watchlist.

Two Stocks to Sell:

Old Dominion Freight Line (ODFL)

Market Cap: $28.9 billion

With its name deriving from the Commonwealth of Virginia’s nickname, Old Dominion (NASDAQ:ODFL) delivers less-than-truckload (LTL) and full-container load freight.

Why Does ODFL Give Us Pause?

1. Declining unit sales over the past two years suggest it might have to lower prices to accelerate growth
2. Earnings per share have contracted by 5.8% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
3. Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

At $136.80 per share, Old Dominion Freight Line trades at 28.3x forward P/E. Read our free research report to see why you should think twice about including ODFL in your portfolio.

CSX (CSX)

Market Cap: $66.72 billion

Established as part of the Chessie System and Seaboard Coast Line Industries merger, CSX (NASDAQ:CSX) is a transportation company specializing in freight rail services.

Why Do We Think CSX Will Underperform?

1. Underwhelming unit sales over the past two years indicate demand is soft and that the company may need to revise its strategy
2. Sales were less profitable over the last two years as its earnings per share fell by 6.5% annually, worse than its revenue declines
3. Free cash flow margin dropped by 18.9 percentage points over the last five years, implying the company became more capital intensive as competition picked up

CSX’s stock price of $35.51 implies a valuation ratio of 19.4x forward P/E. If you’re considering CSX for your portfolio, see our FREE research report to learn more.

One Stock to Watch:

Ross Stores (ROST)

Market Cap: $52.43 billion

Selling excess inventory or overstocked items from other retailers, Ross Stores (NASDAQ:ROST) is an off-price concept that sells apparel and other goods at prices much lower than department stores.

Why Are We Fans of ROST?

1. Fast expansion of new stores to reach markets with few or no locations is justified by its same-store sales growth
2. Brick-and-mortar locations are witnessing elevated demand as their same-store sales growth averaged 3.1% over the past two years
3. Stellar returns on capital showcase management’s ability to surface highly profitable business ventures

Ross Stores is trading at $160.45 per share, or 2.3x forward price-to-sales. Is now the time to initiate a position? See for yourself in our full research report, it’s free for active Edge members.

Stocks We Like Even More

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