The talk of higher interest rates has investors switching to sectors like financials and energy in recent weeks because technology tends to underperform in such an economic environment. But Treasury Partners’ Richard Saperstein is going against the grain.
Saperstein’s remarks on CNBC’s “Worldwide Exchange”
Saperstein is still bullish on the big cap technology names. On CNBC’s “Worldwide Exchange”, he said:
We like mega-cap techs because they have very strong operating cash flow that is evident in the likes of Microsoft, Amazon, and Google. If you get a market that goes down 10% to 15%, you can be sure that these companies will be in there buying back stock to support their price levels.
Higher margins and lower beta in tech stocks were among other reasons why Saperstein is “overweight” on the tech titans.
Why Saperstein likes Cisco Systems Inc
One name that particularly pops out to Saperstein within the technology niche is Cisco Systems Inc (NASDAQ: CSCO). He said:
Cisco is going through a transformational moment where it’s moving its revenue stream from product sales to subscription services. We see its subscription sales going from about 32% to 50% in 2025 that will get them 20 to 22 times earnings.
In comparison, Cisco is currently trading at 16.5 times earnings – lower than the market multiple. So, the supply chain constraints, Saperstein added, are already reflected in the stock. He also expects such issues to be temporary and expects them to be resolved in 2022.
Last month, Bank of America reiterated its “buy” rating on Cisco Systems Inc.
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