In an interview with CNBC’s Market Watch, David Katz of Matrix Asset Advisors offered advice on spotting values and opportunities. Katz told CNBC that mega-cap technology stocks are still selling at good valuations, and if investors have a 9-12 month timeline, it’s a good time to get into that sector. He highlighted Apple, Microsoft, Google and Facebook as currently selling at attractive prices.
The market is impossible to predict in the short-term, and investors should look at companies whose valuations are the most attractive, and then buy the weakest on the list, Katz says, adding “don’t chase rallies.” Looking to “call a low” is virtually impossible in this environment, and investors should be looking long-term. The more successful way to invest in this market is to find stable companies that are selling at a cheap price. While these companies might still go down after you buy them, it’s highly likely that in 9-12 months they will have gone back up. Katz pointed to PayPal, which is currently off 60-70% from its highs, but has good long-term prospects; buying a high-quality company that has the legs to go the distance is the way to get good future returns on a current investment, according to Katz.
As for a “shopping list” of companies that are good businesses trading at discounted valuations, aside from PayPal, Katz pointed to growth stocks that have fallen out of favor, like Google and Facebook and Starbucks in particular, which is down significantly this year, as well as financial companies like Goldman Sachs that are also selling at a discount. Though the consumer staples sector is booming and isn’t offering the discounts that many other sectors are, Unilever has been underperforming and “has a lot of catching up to do,” which provides a great opportunity for investors to get in while the price is lower. As for what Katz is staying away from, he told CNBC that the utilities sector is doing very well, with prices too high to be considered the kind of bargains to be found in the other sectors he highlighted.