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Nasdaq 100 nears record, and traders agree one lagging component can catch up

As Nasdaq 100 nears records, some of its biggest laggards may catch up

Struggling Starbucks shares can pick up steam and catch up to the broader market, two traders said.

As the tech-heavy Nasdaq 100 index sits less than 1% below its all-time high, a handful of its components including Starbucks are still double-digit percentages below their 52-week highs:

Starbucks in particular has standout potential when it comes to regaining its highs, Todd Gordon, managing director at Ascent Wealth Partners, told CNBC's "Trading Nation" on Tuesday.

"If we take a look at the weekly chart, you could see that the sell-off during the Covid crisis was significant," he said.

"It did hold up trend support in that parallel channel. The [relative strength index of momentum] got very oversold. But, again, support held and we don't have resistance, if and when this pandemic passes, up until about [$]110," he said.

Starbucks shares closed less than 1% lower at $77.78 on Tuesday.

Pointing to Starbucks' daily chart, Gordon said the stock could get a "caffeine shot" of momentum that could bring it to the $100 level if it's able to break above short-term resistance around $80.

"From a quick fundamental point of view, Starbucks was growing, I think, the fastest in four years before ... Covid-19 happened. There's been some developments in China. A lot of the cafes are back open. They had a little bit of fraudulent activity with Luckin. Starbucks is recapturing some of that share. So, we're generally bullish once this thing begins to pass," Gordon said. Starbucks' China-based rival Luckin fired two top executives last month as part of an internal investigation into sales fraud.

Michael Bapis, managing director of Vios Advisors at Rockefeller Capital Management, agreed with Gordon on his pick, crediting Starbucks' "nimble" management team.

"Coffee was supposed to be recession-proof business and I think they got caught off guard a little bit, which is why the innovation of the management team is so important," Bapis said in the same "Trading Nation" interview.

"They were crushed by the pandemic, but we see opportunity here," he said. "They're reinventing themselves with curbside pickup and other different innovations during these slow times."

Bapis' other pick was the stock of networking technology company Cisco, which closed more than 1% higher on Tuesday.

"Work from home is going to drive their demand. It's here to stay for the foreseeable future," Bapis said, noting Cisco's ongoing expansion of its networking and security applications. "At the end of the day, technology drives our society now, and we believe they just got hit for no reason."

So, when it comes to Cisco and Starbucks, "I think these two companies will be higher in 12 to 18 months, especially due to strong leadership," Bapis said.

As for the Nasdaq 100 itself, Gordon said he thinks it will soon retake its Feb. 19 record as investors rotate back into previously sidelined groups such as small caps, semiconductor stocks and the FAANG names.

"I don't think it's unusual ... to see a little bit of consolidation below the all-time highs as we're getting a little bit of a pickup trade here in the other sectors that have been significantly beaten down," Gordon said. "We're seeing a really good sort of response here and we think what we saw pre-Covid should reemerge here going forward once all this dust settles."

Disclosure: Ascent Wealth Partners, Todd Gordon and Vios Advisors all own shares of Starbucks. Vios Advisors owns shares of Cisco.