Morningstar’ s David Sekera thinks the market sell-off is looking overdone — and reveals the tech stocks he thinks are attractive right now, as well as his picks to ride the return of consumer spending. The market has been beating tech stocks for many years. However, this year’s sell-off was triggered by fears of Federal Reserve tightening. Tech stocks were forced to exit growth stocks. Nervousness has been further exacerbated by earnings disappointments and the unfavorable outlooks of some major tech brands. The broad-based S & P 500 is down around 16% this year, while the tech-heavy Nasdaq Composite has fallen over 25% in the same period. Sekera believes the market’s current value is “undervalued,” according to Morningstar’s chief U.S. markets strategist. Sekera stated that the U.S. stock market had fallen fast enough to make it appear “undervalued.” Sekera estimated that the U.S. equity market trades at about 15% below what Morningstar considers fair value. Sekera says that this is concentrated in four megacap stocks which have seen their value drop by about 15%, Alphabet. Amazon. Microsoft. and Meta. He stated, “Year-to-date, each stock has seen a drop in price that is greater than the average market, but we are still confident in their value for long-term investors.” Read more David Tepper bought three tech stocks and sold GM and retail stocks. The Tech Sell-off represents a generational buying opportunity for the ‘right stocks’ according to analyst Ives. Sekera was cautious about Amazon because of “tough competition and the impact of Amazon’s massive spending during the coronavirus epidemic, but he said that the market is undervaluing Amazon Web Services. According to Sekera, cloud businesses are poised for growth. He also described Amazon’s advertising as being “very value.” Sekera believes that investors should buy all four stocks at a discount. Sekera stated that they all find the stocks attractive at current levels. Sekera sees other opportunities in the consumer market, and he expects normal consumer spending to return. Normalization stocks are expected to do well in second half of this year. Uber Technologies, a ride-hailing company that Sekera loves is one of his favorites. Sekera believes the company will experience an increase in ridership and frequency in the next months and that it will achieve positive free cash flow in this year and positive earnings for 2024. Sekera predicts that airline stocks will benefit as well from the return to pre-pandemic business travel levels in 2024. He said that Delta Air Lines, Sabre (a Texas-based travel technology company), and Sabre are the best leverage to reap the benefits of the return business travelers. Sekera also considers Carnival to be the best choice in the cruise-line sector and Caesars Entertainment as a gaming company. Sekera noted that a significant number of high-quality, lower-risk stocks have been caught in the sell-off and could provide an opportunity for investors, especially those stocks with wide “economic moats” — or strong competitive advantages —and lower level of uncertainty surrounding them. These companies are best placed to weather economic disruptions and have typically the strongest pricing power in order to offset inflationary pressures,” Sekera stated. He named Honeywell, Estee Lauder, Wells Fargo, Honeywell, and BlackRock as her preferred stocks.
Lower Manhattan: The New York Stock Exchange is standing after global stock markets fell. There are concerns that increasing inflation could prompt central banks in New York City to tighten their monetary policies on May 11, 2021. After falling 2.2% from its session low, the tech-heavy Nasdaq Composite lost 0.6% by mid-afternoon.
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Morningstar’s David Sekera thinks the market sell-off is looking overdone — and reveals the tech stocks he thinks are attractive right now, as well as his picks to ride the return of consumer spending.
