Some investors may want to take advantage of the decline in technology, Delano Saporu, chief executive officer and senior adviser at New Street Advisors Group, told CNBC’s “Trading Nation” on Wednesday.
If yields continue to rise despite the Fed’s relatively dovish stance, tech stocks will face “short-term pressure as the market tries to figure out what’s next,” Saporu said. “In the long run, I think it will.”
His top picks in the group were Microsoft and Apple, the top two weights in the S&P tech sector.
“In the long term, we will be in a good position,” he said. “So if you are a long-term investor, this is an opportunity to enter with lower valuations and I think in the long term, we will see the technology stakes rise.”
Saporu was also looking at stocks that could see “tailwinds of demand suppressed” – he noted that the airline played Delta and United Airlines in a previous email to CNBC – and the video game and virtual reality industries.
“I want to see … what happens to cryptocurrency games” and non-fungible tokens, the digital collectibles commonly known as NFTs, as video game and virtual reality companies seek to incorporate them into their strategies, Saporu said.
This market environment has become particularly good for stock pickers, Joule Financial chief investment officer Quint Tatro said in the same “Trading Nation” interview.
“For the first time in a long time, this is a stock picker market,” he said, adding that while Big Tech could remain under pressure as rates rise, “there is an incredible opportunity to identify other sectors and stocks.” .
“In fact, we would be sellers for Apple and Microsoft,” Tatro said. “Those … we keep seeing them as stay-at-home plays, and we would be buyers specifically from Facebook, but also from Google as a kind of reopening and advertising play, as small businesses are looking to really regenerate that growth and really inventory those shop windows. “
Though often grouped with technology, Facebook and Alphabet, Google’s parent, are the top two weights in S & P’s communications services sector.
Tatro also had his eye on a less conspicuous craft.
“I really think investors should look into a little-known sector that we really lost sight of until recently, and those are the materials,” he said.
Materials stocks increased about 6% over the last month and a little over 8% year-to-date.
“Specifically, I think industrial metals are very, very interesting here,” Tatro said. “We really like some of the steel works: Commercial Metals, CMC, as well as Reliance Steel. These are names that have exceptional earnings on the upside here in the next few years, especially with … the kind of reflation and the growth story. global again up and running, and they have exceptional balance sheets and are sold at real value. “
Disclosure: New Street Advisors Group, Joule Financial, Delano Saporu and Quint Tatro own shares of Apple and Microsoft. Joule Financial and Quint Tatro own shares in Alphabet, Facebook, Commercial Metals and Reliance Steel.