3 mega-cap tech shares that can achieve massive as rates of interest rise: analyst

3 mega-cap tech stocks that will gain big as interest rates rise: analyst


It might be time to go searching for some tech shares after the house has been hammered in latest weeks amid considerations on future returns in the course of the Federal Reserve’s looming rate of interest will increase.

Veteran tech analyst Mark Mahaney at Evercore ISI has singled out three mega-cap tech names that needs to be in your buying checklist. 

“Our prime three mega-cap picks this 12 months are Uber, Amazon and Fb [Meta],” Mahaney mentioned on Yahoo Finance Stay. 

Mahaney’s name on mega-cap tech names displays a combination of compelling valuation and nonetheless enticing fundamentals. 

“Fb often is the best [choice] of these. It trades at 22 occasions earnings, and for one thing that I feel can develop earnings 20% to 30%. You have got a ton of money on the steadiness sheet. This factor trades near a market a number of for income development that’s 3 times better than the market. Earnings development that’s two occasions better. I feel that may be a nice kind of worth development play in large-cap,” Mahaney mentioned. 

Meta shares are down 1% year to date in comparison with a 3.2% drop for the Nasdaq Composite. The superior 23% in 2021, comparatively in keeping with the Nasdaq.

Whereas Mahaney upgraded Doordash this week on a view its meals supply service is changing into entrenched amongst customers caught at dwelling amidst the pandemic, he nonetheless views Uber as an excellent play from the gig economic system. 

“Uber is our massive restoration play. It is the one with probably the most upside if and after we come out of the COVID disaster,” Mahaney mentioned. 

Uber’s inventory plunged 21% final 12 months, however shares are up 2.5% to this point in 2022.

The ultimate decide is Amazon, which as Yahoo Finance has written has turn out to be a battleground inventory. 

Amazon’s stock is down 1% for January. Zoom out and the efficiency is much uglier.

Shares are down 11% from their peak on July 8, in any other case referred to as a correction (lower of 10% off the highs).

Mahaney acknowledged Amazon’s prices to construct out its litany of providers (see same-day supply) in the course of the pandemic has shocked him to the upside. However just like Fb/Meta, valuation is just too enticing to disregard. 

“There’s a huge funding cycle occurring at Amazon. What occurs while you see that, margins come down. That was the shock. That’s what dragged the inventory again down from breaking out. I feel as you undergo this 12 months, you may begin comping in opposition to that. This firm confronted quite a lot of inflation and provide chain dangers within the again half of final 12 months. I feel all of these can be absorbed into the enterprise mannequin or comped in opposition to. That can enable margins within the again half of the 12 months to speed up, and the inventory to take off,” Mahaney mentioned.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Comply with Sozzi on Twitter @BrianSozzi and on LinkedIn.

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