If the Nasdaq-100 is driving toward 20,000, there will be at least a minor detour along the way.

Since riding a five-month winning streak as high as 15,932 this summer, the tech-heavy index has reversed below 15,000. Inflation, rising interest rates and mixed Q2 earnings reports are all to blame. Most recently, violence in the Middle East has sparked an exodus from higher risk stocks to defensive sectors, bonds and gold. 

In what bulls are hoping will amount to a healthy pullback for the once sizzling Nasdaq-100, there is a silver lining. Valuations, which were arguably bloated, have come down with share prices. Netflix, PayPal and Rivian are each down more than 20% from the Nasdaq’s July 19th peak. DexCom, Enphase Energy and Illumina are down more than 30%. The index as a whole now trades at 22x trailing earnings compared to 27x at the start of the year.

This means investors that may have missed the 2023 Nasdaq run have an opportunity to invest ‘on the cheap’ (relatively speaking). For those that like to dabble in individual stocks rather than the popular QQQ exchange traded fund (ETF), there are even cheaper options. Roughly 1 out of 4 Nasdaq-100 stocks now have trailing P/E ratios under 20x. 

Looking ahead to next year, when Wall Street expects Nasdaq profits will grow, the P/E ratios get more compelling. So compelling that these three stocks can be had for less than 10x 2024 earnings. 

Is eBay Stock Undervalued? 

eBay Inc. (NASDAQ: EBAY) is down 20% from its 2023 peak and nearly 50% from its all-time high. The e-commerce platform has taken a backseat to Amazon’s dominance during the online spending slowdown and is on track to post flat earnings per share (EPS) growth this year. A weaker discretionary spending backdrop has led to fewer active buyers and lower transaction volumes amid the omnipresent Amazon and Walmart threats. 

As a result, eBay shares are trading at 9.6x next year’s earnings estimate. Amazon’s 2024 P/E ratio is 41.5x. Of course, eBay is not ‘The Zon,’ but it does have some unique growth catalysts. With a focus on its best-selling product categories, a wave of new features are being added to the eBay Marketplace to improve the user experience. Investments in international shipping capabilities and new advertising channels also bode well for future revenue growth. Last, pressure from prominent activists Elliott Management and Starboard Value could also boost eBay’s long-term profitability. 

Is It Too Late To Invest in Diamondback Energy?

One stock that hasn’t pulled back during the Nasdaq correction is Diamondback Energy, Inc. (NASDAQ: FANG). Up 20% since July 19th, the index’s lone oil and gas producer is benefiting from an uptrend in energy prices that began well before the Israel-Gaza war. Supply cuts from OPEC+ members and Russia-Ukraine volatility have pushed crude prices well off their summer lows. Expectations are that a commodity uptrend will lead to stronger financial performances at Diamondback Energy.

Analysts are projecting that EPS will grow 20% in 2024 as Diamondback capitalizes on its premium Permian Basin assets and operational excellence. This puts the forward P/E ratio at 7.9x, the second lowest in the Nasdaq-100 after Walgreens Boots Alliance. Although energy stocks typically have lower P/E ratios than tech stocks, Diamondback’s value goes beyond the P/E. The company pays a variable plus base quarterly dividend that presently amounts to a $3.36 per share annual distribution. 

What About International Nasdaq Stocks?

There are a handful of non-U.S. equities in the Nasdaq-100 and JD.com, Inc. (NASDAQ: JD) may be the most intriguing. A leading e-commerce technology provider in China, JD.com is down 52% year-to-date despite growing EPS more than 40% in the first half of 2023. 

More importantly, the company has exposure to China’s massive e-commerce opportunity. As retailers complete their digital transformations to gain access to the country’s 884 million online shoppers, many are likely to tap JD.com’s tech resources, nationwide warehouse network and last-mile delivery capabilities. The company will face plenty of competition from Alibaba, fellow Nasdaq-100 member PDD Holdings and others, but is undeniably inexpensive at 8.5x next year’s earnings — that's less than half PDD’s 2024 multiple.