It’s always a good time to invest for the long term.
The Nasdaq Composite has had a notable run of over 30% in the trailing 12 months. Investors have been happily enjoying the fruits of the bull market after its pandemic highs and doldrums.
Both bull and bear periods are a normal part of the market cycle that you will inevitably encounter as a long-term investor. When you invest in companies for years or decades at a time, you will experience rough patches, but you can also benefit from the best days that the market has to offer.
If you’re looking to invest more cash in this 2024 bull market, you don’t have to look far to find great businesses worth your time and money. Here are two top Nasdaq stocks to consider now.
1. Intuitive Surgical
Intuitive Surgical (ISRG -1.93%) is something of a rock star in the medical devices world, known for its lineup of surgical robotic systems. Its flagship suite is called the da Vinci surgical system, and the company has several versions out on the market. The da Vinci system is used in procedures including cardiac, thoracic, bariatric, and hernia repair surgeries. The company also has a surgical platform for minimally invasive lung biopsies, called the Ion.
Slowdowns in procedure volume during the height of pandemic and the period that followed weighed on the company’s growth, but the ship seems to be steadily righting itself. The recent quarter saw Intuitive Surgical bring in profits of $545 million on revenue of $1.89 billion. Those two figures were up 54% and 11%, respectively, from the prior-year period.
At last count, the company had 8,887 of its da Vinci surgical systems installed for healthcare providers around the globe. That was a double-digit increase of 14% compared to its installed base in the same quarter in 2023. Procedure volume also grew by a nice bump of 16% in Q1 compared to last year.
While a single da Vinci surgical system can cost a hospital as much as $2.5 million, most of Intuitive Surgical’s revenue is recurring revenue from sources like replacement instruments and accessories. Instruments and accessories for these surgical systems typically have a lifespan of anywhere from 12 to 18 uses before they must be replaced. The company also earns recurring revenue from service contracts that customers sign when they purchase a system.
In 2023, recurring revenue from instruments, accessories, services, and operating leases comprised 83% of Intuitive Surgical’s total revenue for the 12-month period. That’s compared to recurring revenue as a percentage of overall revenue of 79% in 2022 and 75% in 2021. This is also a cash-rich business that’s delivered levered free cash flow of about $529 million over the trailing-12-month period.
The stock has jumped by over 30% since the start of 2024 alone. Investors with a multiyear buy-and-hold horizon could benefit from a durable growth runway and returns upon taking a slice of this business, which still dominates the lion’s share of the surgical robotics market.
2. Netflix
Netflix (NFLX -0.19%) has gone through some serious changes over the last few years. The company’s stock and its balance sheet skyrocketed during the earlier pandemic period, but that was followed by an equally momentous fall back to Earth as consumer wallets tightened and the world reopened.
Some investors stayed with the stock through this turbulent time, while many sold it off in droves. The macro environment has been tough on a lot of companies, and Netflix was no different. Rising competition has also been a factor that’s affected the company’s growth trajectory in recent years.
However, management’s diligent capital management, the diverse range of quality content available, and changes to the company’s subscription tiers have made significant headway for the business. The company has brought in profits of $6.4 billion and revenue of $35 billion over the trailing 12 months, along with free cash flow of approximately $20 billion in that same time frame. Shares are up close to 50% since the start of 2024.
Netflix’s launch of an ad-supported tier across many of its core markets — users can pay $6.99 a month for a plan with ads as opposed to the standard $15.49 per month fee — has been a massive hit. Adoption was slow at first. However, Netflix announced in May that the ad-supported tier had already hit 40 million subscribers, up an eye-popping 700% from one year ago.
This is likely a combination of new subscribers as well as old subscribers who switched to the ad-supported plan, but it nonetheless demonstrates the popularity of this platform to a wide range of viewership. While some subscribers may be hesitant to pay for the standard plan due to budget constraints, the cost of the ad-supported plan isn’t much more than the price of a coffee, and may be far more palatable to the average consumer.
Where consumers used to be far more reluctant to sit through ads to watch their favorite TV show or movie, that trend is changing. A recent study by Disqo found that while 36% of consumers were unwilling to watch a streaming service with ads in 2022, that figure is now only 13%. Netflix is still the top streaming platform worldwide. Investors who stay with this stock for the long term and add to a position over time could benefit from sizable returns in the next five to 10 years.
Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intuitive Surgical and Netflix. The Motley Fool has a disclosure policy.