The Nasdaq vs. the S&P: Why one looks like a way better value

The Nasdaq composite has just concluded its third consecutive week of losses, and at this point, the index looks to be more appealingly valued than the S&P 500, according to one investor.

"The thing is right now, the Nasdaq actually looks attractive," Erin Gibbs, equity chief investment officer at S&P Investment Advisory, said Friday on CNBC's "Power Lunch." "We're still looking at really good growth over the next 12 months, about 90 percent, and it's trading at about 18 times [expected forward] earnings. It's starting to look cheap."

While the S&P 500's price-earnings ratio is slightly lower, that index's smaller earnings growth prospects mean that the Nasdaq looks preferable.

Over the past three weeks, the Nasdaq is down 3.7 percent, while the S&P 500 is off by less than 1 percent.

"Any time the Nasdaq goes below 18 [forward P/E], it's been a really good buy for the past three years. Though these sell-offs could be really great buying opportunities, I'd let the sentiment keep rolling out. But if it goes a little farther, it's time to buy," she said.

However, Gina Sanchez, founder of Chantico Global, warns that the Nasdaq's growth will ultimately be determined by the broader U.S. economic outlook, which doesn't look particularly promising in her view.

"Every year we've started with expecting more out of earnings, more out of the economy, and ending up on a sour note at the end of each year," she said Friday on "Power Lunch." "We're probably headed in that direction, and I think that's what the market is reacting to at the Nasdaq; it's reacting to a shift in sentiment that's been continuing to shift."

For that reason, the Nasdaq is not as cheap as it looks, in Sanchez's view.

"We're looking at probably ending the year at sub-2 percent growth for GDP for the U.S. That has an impact on your expectation for growth, generally. So is 18 times forward cheap? I think you're going to have to calibrate that to what you're expecting going forward."

Read MoreNasdaq falls 1%, closes at lowest since mid-March despite Apple gain


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Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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