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Strategists reveal how they’re trading tech stocks — and the same names keep coming up


Investors and strategists have revealed how they’re playing the beaten-down tech sector, naming several stock opportunities in a market they say could be nearing the bottom. Lee Baker, owner and president at Apex Financial Services, described Apple and Microsoft as “good solid companies” for investors to consider right now. Speaking to CNBC’s Squawk Box Europe on Friday — before the market’s temporary recovery and subsequent fall — he said the tech market was “getting pretty close” to the bottom. “You can look at the Nasdaq and think of it as being a big basket. I don’t know that I’m ready to dive into particularly the tech sector as a whole. But companies like an Apple, a Microsoft that you know are good solid companies, who should come out on the other side of this in good shape, are beginning to look particularly attractive,” he said. “Apple continues to innovate over and over. They are hampered by some of the supply chain issues, just like everyone else, but [are] a very sold company,” he added. The tech-heavy Nasdaq index is down about 27% in the year to date, hitting a 52-week low on May 12. Apple shares have fallen around 20% in 2022, while Microsoft is down 24%. Baker recommends investors look at a three-to-five-year time horizon when buying stock in the companies. ‘Defendable profit margins’ Apple is also a pick for Patrick Armstrong, chief investment officer at Plurimi Wealth Management. Speaking to CNBC Thursday, the day after both the Dow Jones Industrial Average and S & P 500 posted their biggest losses since 2020, he said: “I own Alphabet and I own Apple … These are companies that have defendable profit margins, they’ve got dominant market positions, they’re buying back shares.” Meanwhile, David Sekera, chief U.S. market strategist at Morningstar, likes Alphabet, Amazon, Microsoft and Meta. “Year to date, the price for each of these stocks has dropped more than the overall market average, yet we remain convinced in the value of these companies for long-term investors,” he told CNBC on Tuesday . Be selective Kristina Hooper, chief global market strategist at Invesco , likened the current tech fallout to the bursting of the dotcom bubble. “What I think we’re going to see is a smaller version of what we saw in 2000, 2001, in that the more speculative parts of the tech space are going to come under pressure. We could see some failures, but much of tech will emerge from this stronger,” she told CNBC’s “Squawk Box Europe” on Friday. Plurimi’s Armstrong said his strategy was to own companies that are trading around 10 times earnings, and short companies with much higher multiples — unless they have good cash flow and profit margins. He has short positions in companies including Just Eat Takeaway , Delivery Hero and grocery technology company Ocado . Investors who short stocks make money when the price of those assets goes down. Looking ahead, Hooper said she thought the tech sector would hold up after the Federal Reserve Bank’s hikes, however. The Fed hiked rates by half a percentage point on May 4 and is set to continue the cycle. “If we look historically at the tech sector’s performance during Fed rate hike cycles after initial difficulty — because again, they go through a rerating process, especially so because of higher valuations — tech stocks have actually held up relatively well historically during those rate hikes cycles,” she said. As such, Hooper recommended being selective when buying tech. “Focus on the companies with strong cash flows with wider net profit margins … Those have been hit hard as well but I do believe they actually represent buying opportunities.” She added that volatile market sentiment is often driven by “a very visceral, very, very emotional reaction.” “There’s not a lot of selectivity and thoughtfulness that goes into these kinds of sell offs. And that really creates wonderful buying opportunities for those who are selective and thoughtful,” she stated. ‘Long-term winners’ Peter Garnry, head of equity strategy at Saxo Bank, also likened the tech sell-off to the dotcom crash of 2000 and said now was the time to look for “long-term winners.” “We will have a lot of blood on the street, there will be casualties, but out of these casualties there will be long-term winners, just like Microsoft, Amazon , [and chip stocks] Qualcomm , Intel and AMD , took big losses in the dotcom burst, there are still long-term winners,” he told CNBC’s Squawk Box Europe on May 9. “We will have the exact same dynamic we think, and cycle, this time around.” Garnry said he likes semiconductor and software stocks as companies’ shift to digital technology, and tipped the commodities, cybersecurity, defense, logistics and renewable energy sectors as the ones to watch over the next eight-to-10 years. — CNBC’s Zavier Ong contributed to this report.

A trader works on the floor of the NYSE American Options market at the New York Stock Exchange, April 16, 2018.
Brendan McDermid | Reuters

Investors and strategists have revealed how they’re playing the beaten-down tech sector, naming several stock opportunities in a market they say could be nearing the bottom.

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