Trading Nation

Two Nasdaq stocks could be best bet to play catch-up, traders say

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Trading Nation: Stocks to watch as Nasdaq approaches record highs

The Nasdaq is out of a correction.

The tech-heavy index is down less than 10% from record highs set in February, one of the best rebounds from March lows on Wall Street.  

But not all stocks have kept up with the bounce. Some of its components such as Western Digital, Ulta Beauty, Baidu, Walgreens, Dollar Tree, Workday and Cisco are still sharply off their own 52-week highs.

A few of those could be investors' best chance to play catch-up, two traders told CNBC's "Trading Nation" on Tuesday.

"We just recently initiated a position in Ulta. I understand that there is investor concern around people not wearing makeup, not getting dressed to go to work, but we think the company is in a strong position, the valuation is attractive to us — it's not super compelling, but it is attractive," said Nancy Tengler, chief investment officer at Laffer Tengler Investments.

Ulta Beauty trades 43% below its 52-week high but has bounced 71% off its March low. 

"If it goes down a little bit, we're happy to buy more," added Tengler. "We do think the online sales growth at 20% to 30% will accelerate and that will pick up some of the lag for the company."

Matt Maley, chief market strategist at Miller Tabak, agrees that some stocks could be poised to pop.

"One, I think, is Cisco. This is a stock that seen a number of higher lows and higher highs. And if it can rally a little bit more and get a major higher high, it's going to be very bullish," Maley said.

Maley added that investors should approach with caution ahead of Cisco's earnings report on Wednesday afternoon, but he notes that the stock typically rebounds from post-earnings declines.

"When it does gap lower, it doesn't necessarily mean it's going to go down for an extended period of time. Frequently it bounces back. So either way, whether it bounces higher or bounces lower after those earnings … look at the $45 level, that's where the trend line from last summer comes in and its 200-day moving average. If it breaks above that, it's going to start playing catch-up to a lot of those other big cap names," said Maley

Cisco traded at $43.22 at Tuesday's close. It is 26% below its July high. 

Disclosure: Laffer Tengler Investments holds Ulta Beauty and Cisco.