Investors frequently turn to the Nasdaq Composite as a barometer of the technology sector’s performance. Recent times have seen the index on a rollercoaster ride. In 2022, it plummeted by 33%, but this year, it made a remarkable comeback, recording a 31% gain so far.
However, the Nasdaq’s 2023 rally hit a roadblock in August and continued to slide in September. Seasonal factors are at play here, with some Wall Street professionals taking time off during these two months, resulting in fewer buyers available to seize market dips. Additionally, concerns linger about how rising interest rates might impact the growth of high-flying technology companies.
For long-term investors, the Nasdaq Composite’s recent weakness could be viewed as a potential buying opportunity. Seasonality is a temporary challenge, and experts speculate that the U.S. Federal Reserve might begin cutting interest rates around mid-2024.
In light of the recent Nasdaq downturn, investors might consider these two stocks for their portfolios:
- Tenable: Poised to Benefit from Cybersecurity Spending
Cybersecurity is an industry that appears poised for growth, regardless of broader market conditions. In a corporate landscape dominated by 24/7 cloud computing, cyber threats are becoming increasingly sophisticated. Tenable (NASDAQ: TENB) stands out as a leading provider of vulnerability management software, a crucial component of cybersecurity.
Tenable’s Nessus platform actively scans devices, operating systems, and cloud networks for vulnerabilities. It is highly regarded for its accuracy, with the lowest rate of false positives in the cybersecurity sector. Moreover, Nessus can identify over 79,000 common vulnerabilities and exposures, surpassing its competitors.
Tenable has leveraged this success to develop a portfolio of industry-specific cybersecurity tools tailored to the needs of various sectors, including automotive, healthcare, and retail. This approach recognizes that a one-size-fits-all cybersecurity strategy is inadequate in today’s complex business environment.
Furthermore, Tenable recently introduced a generative artificial intelligence (AI) tool called ExposureAI. This tool aids businesses in understanding their risk profiles and security posture. It empowers cybersecurity managers to proactively identify potential vulnerabilities in their networks before malicious actors exploit them.
Although Tenable’s revenue growth in the first half of 2023 was a modest 18%, it raised its full-year forecast in the second quarter, hinting at potential improvements ahead. The company continues to attract high-spending customers, with a 26% increase in businesses spending a minimum of $100,000 on Tenable’s software in Q2 compared to the previous year.
Looking ahead, research firm McKinsey & Company predicts that cyberattacks could cause annual damages of $10.5 trillion by 2025. To adequately protect themselves, businesses are urged to invest up to $2 trillion annually, a stark contrast to the approximately $168 billion spent in 2022. Tenable is well-positioned to bridge this gap, and with its stock down 6% during the recent Nasdaq dip, it presents an attractive buying opportunity.
- Workiva: Capitalizing on a Lucrative Opportunity
As organizations increasingly rely on online, cloud-based applications and remote workforces, managing employee productivity across numerous online apps can be a challenge. Workiva (NYSE: WK) provides a solution to this predicament.
The company has developed a cloud platform that integrates with dozens of third-party productivity, storage, and accounting applications, including Microsoft Excel, Google Drive, and Salesforce. Workiva aggregates data from these sources into a single dashboard, offering managers a centralized and accurate view of critical information.
In addition to simplifying data management, Workiva offers hundreds of reporting templates, making tasks such as filing forms with regulatory authorities like the Securities and Exchange Commission more efficient for managers.
Workiva is also expanding into new verticals, with a significant opportunity in environmental, social, and governance (ESG) reporting. Governments worldwide are introducing rules mandating companies to track their environmental and societal impact. The ESG reporting software market was valued at $9.6 billion in the U.S. and Europe in 2021 and is expected to grow by 12% annually until 2026, reaching nearly $17 billion. This presents substantial long-term growth potential for Workiva, which anticipates generating $627 million in revenue for the full 2023 year.
Notably, Workiva boasts 5,860 business clients, with 272 of them spending over $300,000 annually. This customer segment is both the company’s top spender and fastest-growing, indicating the potential for continued growth as more large organizations adopt ESG reporting tools.
While Workiva’s stock has experienced a slight decline in September, it remains 33% below its all-time high set during the tech boom of 2021. Given the company’s promising prospects, this dip represents a promising long-term investment opportunity for investors.
