Big Tech stocks offer ‘prime buying opportunities,’ strategist says

Defiance ETFs CEO Sylvia Jablonski joins Yahoo Finance Live to discuss Big Tech amid volatility and inflation, buying opportunities for investors, and the outlook for consumer demand.

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BRAD SMITH: Welcome back to Yahoo Finance Live everyone. With growing concerns of inflation and Fed rate hikes creating considerable uncertainty for the market, our next guest says now is the time to dive into some of those big names, like Amazon and Microsoft, that have been struggling as of late.

Joining us now, we've got Sylvia Jablonski, who is the CEO and co-founder of Defiance ETFs. Thanks for joining us here this morning, Sylvia. First and foremost, when you look across some of the tech names that have taken on the brunt of this hit, where are you sensing those opportunities? And how long would those time horizons be that you're setting as well?

SYLVIA JABLONSKI: Good morning. Great to be with you here today. Well, I think in terms of time horizon, what we're going to see in the short-term is a lot of volatility. We're going to see these sharp pullbacks. Perhaps we're going to see sharp uptrends, you know, bear-- bear market bounces.

But I think in the short-term, we're going to have volatility. So the time period for the stocks that I'm about to talk about, for me, is longer-term. And by longer-term, I mean at least two to three years out, potentially up to five years.

So why is it a good time to start picking up these stocks? I just think that tech has just been absolutely beat up. If you look at the multiples, you know, we're down significantly across all of the major S&P sectors. We're sitting at about an 18 down from a 30 in some cases. Stocks like Amazon, Microsoft, Google, Apple, even throwing some of the semiconductors like Nvidia are down 30% or more from 52-week highs.

And, you know, what's happening here is I think that these names have really taken the brunt of all of the headwinds, whether it's geopolitics, whether it's rate hikes, whether it's inflation. And I think that they're at levels that are prime buying opportunities because they're going to be part of every major trend in the future.

So you're going to have growth in AI. You're going to have growth in cloud and cybersecurity. You're going to have growth in consumer discretionary products, which-- which both Amazon and Apple touch there. They have pricing power, free cash flow. You know, they've had pretty solid earnings and revenues.

I know that, you know, Amazon took a big hit in terms of some of the negative feedback. But if you tear the numbers apart. I mean, 37% growth in cloud. 78% growth, if you look at that over the last two years, it's actually pretty decent. And these are the names that are going to continue doing well into the future.

BRIAN SOZZI: But Sylvia, just to push back on that, can't you see-- can we realistically see, potentially, another 10% plus wiped off some of these names. And I bring up two points. One, so the NASDAQ closed below 13,000 on Friday. That is a major sell signal for a lot of traders out there. And two, there's another shoe starting to drop in tech, and that is lowering profit estimates there by the street. Of course, that is putting more pressure on some of these stocks.

SYLVIA JABLONSKI: Yeah, great point. And, I think-- I think, again, in the short-term, could they fall further? They certainly can. And I think a lot is hanging, in particular, in the short-term on what happens both on Wednesday and on the next CPI read. You know, I think if we get atop the inflation number that-- that, you know, starts to-- actually, a downward-trending inflation number that looks like we're coming off of the peak, that's going to be a positive signal for the market. And I think that that'll give you some buying momentum in the near term.

But I fully agree with you. I think that there's potentially additional pullbacks on the way. It's really hard to call the bottom. But I think, you know, for me, when I see these levels of 20% to 30% down, and I think about the future-- and again, these names are part of every single, you know, evolution and a theme that we need to go forward.

So I think getting in here, whether they fall another 5%, 10%, I'll keep getting in at those levels and kind of dollar-cost average in. For the next two to three years, it's going to look pretty good, I think. And yeah, you know, I do take your point that they can pull back further.

But again, there are good buying opportunities for investors that have cash on hand. And look, you're locking in losses with inflation. You've got to do something with your money, right? And if you sort of have the stomach to wait it out, I do think that these levels will pay off longer term in the future.

JULIE HYMAN: Hey, Sylvia. It's Julie. It's good to see you. There is another group that you're looking at as well. And this is, coincidentally or not, a group in which you have an ETF, and that is the reopening trade, right? I think about Hilton, which reported this morning and beat estimates, the airlines, which have talked about demand roaring back, and yet, if you look at this group sort of as a whole, it hasn't necessarily come roaring back. What do you think is going to be the trigger there?

SYLVIA JABLONSKI: Yeah, good morning, Julie. Great to see you. And absolutely, I think-- that's why I think it's sort of a good time to get into this, whether you look at our ETF, or whether you look at single stock-- stock picks here. There is so much pent up consumer demand. We've seen the consumer spending transition from goods to services.

The reopen trade just-- we've been talking about it for a long time, but then we kind of kept getting these issues coming back into the system, whether it's additional outbreaks of COVID, you know, later in the year with Omicron and an additional sort of, like, lockdowns and restrictions and people just being a little bit afraid to travel. But if you look at the earnings and some of the details that are coming from the CEOs, you know, Delta, Southwest, United, they're talking about bookings that are in some cases at all-time highs for business travel, back to pre-pandemic levels.

You know, Europe is starting to come back online. Again, there's $2 trillion of savings with the consumer spending going from goods to services, pent-up demand. Memorial Day is just around the corner. I really think that this is the time for the travel re-open trade. And I think you get-- you know, you can do airlines.

You can do cruises and hotels. You've got a cruise ETF on that. You can just do airlines. Pick, like, the Deltas, the Southwests that are doing quite well and recovering quickly. Royal Caribbean, Carnival have been beat up. And then even some of the other names, Expedia had some great forecasts and detail around their earnings, number two, so you can look at some of those types of trades, too. I just really think that this is going to be a good time to get into those names. Because they are being punished like the rest of the market over the last couple of days.

BRAD SMITH: Is the amount of spending that happens on those trips, on those vacations, is that even in comparison to pre-pandemic levels, considering that you're spending more to get there?

SYLVIA JABLONSKI: Yeah, I think it's catching up in sort of a-- a-- you know, cloudy sort of way. Because to your point, I think prices have gone up so much. I've experienced this myself, having to change a flight just a month after I booked it and paying a ridiculous amount of money for the new ticket price. So, you know, prices are definitely up. But it seems as though the consumer is paying those prices and really willing to get out there.

So I think that cash flows are going to be good. Revenues are going to come back up. Eventually that'll stabilize, right? I think part of this is oil. I think part of this is geopolitics. I think part of this is some of the sort of supply issues and workforce issues that some of the airlines have had in particular. But a lot of that is going to, I think, come down along with inflation and potentially the resolution abroad on the oil and gas energy cost front.