Stock Market

It wouldn’t take a rocket scientist to know that the best-performing Nasdaq stock in 2023 is Nvidia (NASDAQ:NVDA), up 244%. It’s definitely one of the must-own Nasdaq stocks.

According to Finviz.com, there are just three Nasdaq-listed Standards & Practices (S&P) 500 stocks that are up more than 100% in 2023; Nvidia is one of them. The other two are Meta Platforms (NASDAQ:META) and Tesla (NASDAQ:TSLA). 

The question is whether it’s one of the three most promising Nasdaq stocks to own now. After all, as much as I admire the company, its shares trade at 37.2 times sales. You could probably buy five Nasdaq stocks with a lower price-to-sales ratio combined. 

So, I will forget about the obvious stocks to own, such as Nvidia, and focus on three up-and-coming, must-own Nasdaq stocks to watch. 

Each has a market capitalization under $20 billion, is profitable and is up for the year more than 35%, over the Nasdaq Composite’s return in 2023. They don’t have to be in the S&P 500 to qualify.    

Saia (SAIA)

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Saia (NASDAQ:SAIA) gets its name from founder Louis Saia, Sr. Saia was selling produce in 1924 in Houma, Louisiana. He concluded it was better to deliver the produce rather than sell it. Thus, the less-than-truckload (LTL) business was born. It will be 100 in 2024. 

Today, Saia has 193 terminals across the United States, serving the U.S., Canada and Mexico. It employs more than 12,000, generating $2.8 billion in 2022 revenue and nearly $500 million in operating income. Its business has grown tremendously organically and through tuck-in acquisitions of regional trucking companies. 

Saia’s market cap is $11.2 billion. It has gained nearly 103% in 2023 and 434% throughout the past five years. Those who bought shares in its 2002 initial public offering have made more than 4,800% of their original investment. 

The company reported in mid-August that its LTL shipments per workday for the six weeks of July and the first two weeks of August were 6% higher, LTL tonnage per workday increased 3.4%, and LTL weight per shipment declined 2.4% to 1,401 pounds.

For the first six months of 2023, its revenue and operating income fell 1.9% and 12.0% respectively. The July and August results suggest the third quarter will deliver better numbers.

XP (XP)

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I’m a sucker for anything Latin American, so the fact XP (NASDAQ:XP) is up more than 89% in 2023 suggests the Brazilian investment manager is still growing 22 years after its founding.   

The company finished 2022 with 946 billion Brazilian reals ($193.5 billion) in total client assets, generating 3.6 billion Brazilian reals ($740 million) in net profit. 

In 2014, the company launched XP Securities in Miami, its first step into the U.S. market. In 2017, it sold 49% of its business to Itau Unibanco (NYSE:ITUB), Brazil’s largest bank. That paved the way for its 2019 IPO, where it sold 72.5 million shares at $27, valuing the business at 63 billion Brazilian real ($17.5 billion).

However, XP stock’s been very volatile over the past three years, hitting $50 on several occasions before falling back into the $30s. From its September 2021 high through its April 2023 low of $10.30, its long-time shareholders have been put through the wringer. 

Eight of the 12 analysts that cover its stock rate it a Buy, with a $138.88 target price. In 2024, it’s expected to earn $9.50 a share. It trades at a ridiculously low 2.8 times its 2024 EPS.

Bentley Systems (BSY)

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Bentley Systems (NASDAQ:BSY) is a software developer for the construction, architecture, and infrastructure industries. 

In April 2021, I recommended Bentley and nine other tech stocks to buy trading under $50. I’m a big believer in founder-led companies. The Bentley brothers founded the company in 1984 and still control two-thirds of the votes. 

BSY went public in September 2020 at $22. Twelve months after its IPO, it was trading near $70. After that, the bloom fell off the rose. Its share price fell by more than half throughout the next 12 months. It’s up 36% YTD.

One reason to like its business: recurring subscription revenue accounts for nearly 88% of its total sales. In the first six months of 2023, its subscription revenue increased by 14.% throughout last year, excluding currency. Its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the first half was $209.5 million, 13.8% higher year-over-year. 

As far as its valuation, its trailing 12-month free cash flow is $339.2 million. Based on an enterprise value of $16.3 billion, it has an FCF yield of 2.1%. That’s up from 1.7% in April 2021. 

It’s grown considerably over the past two years but still has a reasonable valuation. This and the rest of the stocks I mentioned are all worthy must-own Nasdaq stocks. 

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

      

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.

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