Ditch Amazon and Alphabet and put your money here: Trader

As Amazon and Google parent Alphabet hit record highs, not everyone sees a case for flocking into high-flying tech stocks.

Brian Kelly, founder of Brian Kelly Capital and trader on CNBC's "Fast Money," says investors aren't making the most of their money when they buy mega-tech stocks. While Amazon has soared since February and Alphabet has seemingly recovered from two questionable quarters, Kelly believes that sector rotation in the market could actually take out the benefits both these stocks would offer.

"Over the last 12 to 18 months, [you have seen] sector rotation," he said Thursday on CNBC's "Power Lunch." "So to me, I'm looking more towards the energy sector and the financials at this point in time."

"Those [sectors] to me seem like they've been the laggard," he added. "They look like they're starting to break out, and they actually have some dividends to them as well."

Financials has been the worst-performing sector on the S&P 500 this year, but recent earnings surprises from some of the big-name banks have given a glimmer of hope to an otherwise underperforming sector. Energy, meanwhile, has looked to be on a slump as oil prices dropped and many energy companies failed to beat earnings estimates.

Meanwhile, Erin Gibbs, equity chief investment officer at S&P Global, sees positive signs for both stocks.

"They're both trading at about 15 percent below analyst target prices, so clearly the Street still thinks there's a lot of potential upside," she said. "Both of them have really impressive growth [with] Amazon looking at about 60 percent long-term growth and Alphabet about 17 percent [long-term growth]."

However, Gibbs does believe that between the two, Alphabet has more potential. While Amazon continues to crush the online retail market with seemingly almost no competition, Alphabet looks to be headed to the upside based on market factors Gibbs sees.

"Right now, out of the two I'd really go with Google over Amazon just more from a valuation [standpoint]," she said. "[Alphabet is] trading at a little more of an attractive valuation, and they're trading a little lower from the target prices than they typically are."

"I just feel like there's a safer bet on the upside with Google versus Amazon," she added.

Over the past month, Amazon is up 2 percent while Alphabet has surged 11 percent; both stocks hit all-time highs on Thursday.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

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.

Follow Michael Santoli on Twitter @michaelsantoli

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