The tech-heavy Nasdaq 100 index is still down a little under 15% year-to-date, but the Trivariate Research founder says it’s time that investors begin to cover their short positions in technology.
Parker’s top pick within technology
Adam Parker recently upgraded technology to “equal-weight”. A subsector within this space that he’s particularly bullish on is biotech. This morning on CNBC’s “Squawk on the Street”, he said:
I think what looks the most oversold is biotech. The multiples are down 50%, the sales outlook is the same. The interest rate call in biotech is overblown. Only 15% of biotech firms ever generate positive cumulative FCF. So, this whole notion that their cash flow is impaired doesn’t apply.
A flattering risk-to-reward ratio was among other reasons why he has a positive outlook on biotech. Last week, Grace Capital’s Catherine Faddis picked biotech giant Amgen Inc as one of her top picks for 2022.
Parker doesn’t see the need for seven rate hikes
Parker is not in the league of experts calling for as many as seven rate hikes this year, or a 100 basis points increase in the interest rate by July 1st. The strength of the U.S. economy, he said, is a sufficient reason for him to be bullish on the U.S. equities in the medium to long term.
History shows that usually when you raise rates, it’s because the economy is good. And when the economy is good, corporate earnings are good. So, I’m pretty bullish on U.S. equities because I think corporate earnings in 2022 will be up versus 2021. That’s my base case.
Parker is also bullish on old-tech names like Dell Technologies Inc that Bernstein’s Toni Sacconaghi called “compellingly inexpensive” last month as he raised his price target to $72 per share; a 20% upside from here.
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