As tech stocks stall, these names may break out

Published Wed, Jun 10 20151:55 PM EDTUpdated Wed, Jun 10 20153:30 PM EDT

Technology, one of the hottest areas in the six-year bull market, has hit a standstill in 2015. But as the sector stalls, the opportunity may lie in individual names. So far this year, the S & P technology sector is up only 2 percent, on pace for its smallest annual increase since 2011. However, underneath that feeble gain, a quarter of the stocks in the S & P technology group are up at least 10 percent for 2015. So how do you invest in tech? Lew Piantedosi, a Morningstar five-star rated portfolio manager at Eaton Vance Management with $13 billion in assets under management, says it's time to get selective, focusing on secular trends like mobile, network security and electronic payments. The global advertising market, for example, continues to see a shift in spending toward the mobile space, with companies like Facebook set to keep capitalizing on that trend, Piantedosi said. The key now is to avoid stocks whose fate depends too much on macro factors like oil, he said. "You don't want to depend on oil prices trading at a certain level for a stock to do well," Piantedosi contends, emphasizing the need to focus on individual names with stable cash flows and revenues. Source: FactSet That strategy has paid off for the investor this year, with his Focused Growth Opportunities Fund (Ticker: EIFGX), up 6 percent compared with a return of 1 percent for the S & P 500 . Among his other top investment ideas are Palo Alto Networks , which is a play on network security. As data breaches increase, Piantedosi believes demand is rising for software applications to combat cyberthreats. In the past 12 months, shares of the enterprise security company have more than doubled in price, up 122 percent. His favorite play in the payment space is Visa , which is in talks to acquire Visa Europe for $15 billion to $20 billion, according to news reports. A recent study by Visa Europe showed that by 2020, mobile payments could replace cash and cards in the United Kingdom. So as Visa expands its global reach, Piantedosi believes the stock could move higher. Shares of Visa hit an all-time high last month and are up 30 percent in the past year. Within the connectivity space, Avago Technologies and NXP Semiconductors are two companies that are positioned to do well, the investor said. The key for selecting stocks in this industry, according to Piantedosi, is to focus on mobile along with computer and industrial applications as companies shift to robotics and machines to boost productivity. Shares of Avago are up 100 percent in the past year, while NXP has risen 63 percent. The portfolio manager also sees opportunities in health care, especially in the biotech space. His two favorite stocks are Biogen and Celgene , which he says have strong pipelines and trade at reasonable valuations considering the growth potential. For those with a higher risk tolerance, he suggests looking at a basket of small- and mid-cap stocks in the biotech space, as he believes consolidation in the industry will continue. Read More Where the profits are: 10 picks Disclaimer

Visa

Technology, one of the hottest areas in the six-year bull market, has hit a standstill in 2015. But as the sector stalls, the opportunity may lie in individual names.

So far this year, the S&P technology sector is up only 2 percent, on pace for its smallest annual increase since 2011.

However, underneath that feeble gain, a quarter of the stocks in the S&P technology group are up at least 10 percent for 2015.

So how do you invest in tech?

Lew Piantedosi, a Morningstar five-star rated portfolio manager at Eaton Vance Management with $13 billion in assets under management, says it's time to get selective, focusing on secular trends like mobile, network security and electronic payments.