Bull Market Buys: 2 Nasdaq Stocks to Hold for the Long Term

The Nasdaq Composite the index first entered the current bull market in December 2022 and is up about 20% since the start of 2024 alone. While this stock market run has injected life into the stocks of many companies across a range of sectors, it is also important to remember that the stock market is cyclical.

Down periods are an inevitable part of an investor’s long-term journey, but the US market has historically had a remarkable habit of eventually recovering from these periods and rising over time. The key principle to benefit from all market cycles is to avoid bad strategies such as timing the market and focus on consistently investing your capital in great businesses.

The next time you’re shopping for stocks to hold for the long term, don’t overlook these two top Nasdaq names.

1. Intuitive surgical

Intuitive surgical (ISRG -0.78%) develops and sells robotic surgical systems to hospitals and other healthcare providers worldwide. A single sale of one of its flagship da Vinci surgical systems can bring in millions in revenue, and use cases for these systems range from bariatric to gynecological to thoracic and cardiac procedures.

Shares are up nearly 50% since the start of 2024 — an impressive advance for any company, but especially for a mature healthcare business. Intuitive Surgical’s financial performance has remained consistent and maintained profitability while generating mid- to double-digit revenue growth over the years.

Growth slowed for a few quarters as procedure volumes fluctuated in key markets in recent years due to the COVID-19 pandemic, but Intuitive Surgical has been steadily advancing since then.

The good news is that Intuitive doesn’t make most of its money from system sales. It also benefits from recurring revenue, which includes both sales of replacement tools and accessories for its systems and service contracts for system maintenance. The company also leases its surgical systems to healthcare providers who choose not to purchase them outright.

In the first six months of 2024, Intuitive Surgical reported generally accepted accounting principles (GAAP) earnings of $1.1 billion on revenue of $3.9 billion — up 37% and 13%, respectively. versus the first half of 2023. System sales accounted for just $866 million of total revenue. The rest came from recurring revenue sources — $2.4 billion from sales of tools and accessories and $631 million from services.

Intuitive Surgical still controls the majority of the global surgical robotics market, although newer competitors have entered the space over the years. Its dominance and robust financial position have given it a solid footing at a time when rising medical costs and macroeconomic factors are still affecting the historically resilient medical industry. If you’re looking to make a three- to five-year (or longer) investment in a healthcare stock, Intuitive Surgical looks like a worthy candidate.

2. Costco

Costco (COST 0.69%) faces the same difficult consumer spending landscape that other retailers do now. However, its membership-based model, diverse product lines, and ability to meet a multitude of essential consumer needs have allowed it to continue its successful track record, even in today’s environment.

Costco buys many of the products it carries in its bulk warehouses directly from suppliers at competitive prices and passes those savings on to consumers. His margins on product sales are slim, but his secret sauce — membership fees — make up for it, giving him sizable and fairly consistent profits.

In the first three quarters of fiscal 2024, Costco reported total revenue of nearly $175 billion. This figure is up 7% from a year ago.

Breaking down revenue for those three quarters by source, $171.4 billion of Costco’s top line came from product sales, while $3.3 billion came from membership fees. Net income for the period (which ended May 12) totaled $5 billion, up 21% from the same time frame in 2023. Member renewal rates in the US and Canada were an impressive 93%. Currently, 46% of members pay for the more expensive Executive level, and these members account for 73% of its sales globally.

Costco shares are up more than 35% since the start of 2024. Still, the company trades for a price-to-sales (P/S) ratio of 1.6, while higher than the historical average, not unreasonable. The market is likely anticipating significant future value creation from the wholesale giant.

This is a business with a proven model that keeps its customers happy through economy, and its balance sheet proves it. Plus, the fact that most of his profits come from recurring membership fees allows him to maintain slim margins on the wallet-friendly bulk sales he’s loved for.

Costco’s dividend could be the icing on the cake for some investors. While the stock yields less than 1% based on current share prices, Costco has increased its dividend by roughly 80% over the past five years alone. Now seems like a great time to get shares of this time-tested company for your long-term investment portfolio.