Large-cap tech stocks are priced below value, said Rafael Resendes, portfolio manager of the Toreador Large Cap Fund. (See his tech recommendations, below.)
“There’ve been four periods over the last 20 years where, if you’d been buying stocks below their value or below their intrinsic value, where that didn’t tend to work, the most noticeable was the tech bubble,” he said. “Back then we had a kind of irrational exuberance that we’re kind of seeing today.”
If an investor bought Cisco Systems in 2000, for instance, they could expect it to grow at sales of 65 percent a year, Resendes said.
Of course, much has changed since that year: “As of yesterday’s close, you’re basically buying Cisco forecasting negative sales growth,” he said.
However, if investors think longer-term, he said, they can expect to profit.
“Much like a casino willing to take a bet in blackjack, we’d be willing to bet Cisco is not going to have negative sales growth in three, four years,” said Resendes.
Investors ought to consider IBM , Google and Oracle , he said.
(BONUS: Watch the interview here to see his non-tech stock picks.)
Disclosure information was not available for Resendes or for his company.