Nasdaq 100 Stocks: Two to Buy, One to Sell

The Nasdaq 100 index features several prominent tech companies, but some stocks within it are struggling due to concerns over profitability and market trends.

Cisco (CSCO) is one such stock that may be worth reconsidering. Founded in 1984 by a husband and wife team, Cisco designs and sells networking equipment, security solutions, and collaboration tools for businesses.

Despite its large revenue base, Cisco's annual revenue growth of 4.9% over the last five years was below expectations, and its free cash flow margin declined by 4.6 percentage points over the same period. The company's returns on capital also suggest that increasing competition is affecting its profitability.

In contrast, Datadog (DDOG) and Seagate (STX) are two stocks in the index that show promise.

Datadog provides a software platform for monitoring and securing cloud applications, infrastructure, and services. The company's revenue has averaged 31.3% growth over the last year, and its customer acquisition costs have rapidly recovered, indicating strong product-market fit.

Seagate, on the other hand, is one of the remaining major hard drive manufacturers after decades of industry consolidation. It has demonstrated impressive annual revenue growth of 36.4% over the last two years, as well as operating margin improvement and expanded free cash flow margins.