Usually, it’s difficult to find growth stocks trading at attractive multiples. That’s simply the cost of admission for embracing growth investing. It’s often harder to find large-cap stocks with the wide moat designation that are credibly inexpensive.
Perhaps to the surprise of some investors, the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM) are among the large-cap growth exchange traded funds that are currently home to some attractively valued growth equities.
That’s likely the result of recent weakness in the growth stock space, which has been caused in large part by rising Treasury yields. Elevated government bond yields depress the allure of growth stocks’ future cash flows. However, for patient investors, there’s still plenty of allure to be had with QQQ and QQQM.
QQQ, QQQM Have Some Bargains
The two Invesco ETFs are known for being home to “glamor” stocks such as Facebook parent Meta Platforms (NASDAQ: META) and Google parent Alphabet (NASDAQ: GOOG), among others, but there are interesting names on the funds’ rosters.
Fortunately, for value-conscious investors, some of the other stocks found in QQQ and QQQM offer surprising discounts. That group includes Dutch semiconductor producer ASML Holding NV (NASDAQ: ASML). ASML is one of the leading producers of photolithography systems, which are essential in the production of chips.
“ASML continues to enjoy strong growth in 2023 despite a soft chip market, in large part due to demand out of China. Morningstar expects this demand to moderate going forward, both organically and due to recently updated U.S. export restrictions. But we nevertheless believe ASML will make up for it with demand in other geographies,” noted Morningstar’s Susan Dziubinski.
On October 31, the stock closed just under $599, but Morningstar’s fair value estimate on the shares is $750, implying significant upside.
Another bargain residing in the QQQ and QQQM portfolios hails from the healthcare sector, which accounts for 6.84% of the funds’ weights. That name is AstraZeneca (NASDAQ: AZN). That blue-chip pharmaceuticals company has an impressive pipeline, which includes some drugs with star potential.
“We think the company’s launched cancer drugs are well positioned as treatments of hard-to-treat cancers. These drugs also carry strong pricing power to support higher margin sales. Astra is well-positioned in the respiratory and diabetes spaces, too, but here, the firm has less pricing power. We think shares are worth $78 each,” concluded Dziubinski.
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