Tech meltdown not quite over, so buy these cheap quality stocks, top analyst Sacconaghi says

Published Wed, Feb 9 20223:16 PM ESTUpdated Wed, Feb 9 20224:45 PM EST

Technology stocks have struggled to start the year, and equity analyst Toni Sacconaghi says there are names you should consider — and avoid — amid the sell-off. "The magnitude of the recent growth to value rotation in tech has few historical precedents," the Bernstein analyst said in a note Wednesday. "The most expensive quintile of tech stocks has collapsed." High-growth tech stocks have fallen as investors brace for the Federal Reserve to hike interest rates and tighten monetary policy to address inflation. Growth stocks trade on the promise of big earnings in the future, so tech shares are often susceptible to declines from rising rates due to their high valuations. "The unwinding in expensive tech is arguably not entirely surprising. While interest rates may have been the catalyst, the root cause was a massive expansion in multiples among expensive tech stocks, particularly in 2020," Sacconaghi said. Among the most expensive quintile of tech stocks, 95% are unprofitable, the analyst noted. "So is there more pain for high-priced tech? Potentially," Sacconaghi said. Investors should pick up lower-priced, value tech stocks while being careful with expensive, low-quality ones, according to the analyst. Take a look at five names on Sacconaghi's list of cheap, high-quality tech stocks. A number of stocks in the value tech camp are semiconductor names. Intel and Broadcom are among Sacconaghi's picks. Facebook's parent company Meta also makes the list after its post-earnings meltdown . Shares are down about 30% in 2022. Also among the analysts' highlighted names are computer peripherals maker Logitech and automation company Teradyne . Now, take a look at five expensive and low-quality tech stocks, according to Bernstein. Ride-hailing app Uber is on the list. The company beat analyst estimates for the fourth quarter and said it's starting to bounce back from headwinds caused by the latest Covid-19 surge. Also on the list is streaming platform Spotify, which has made headlines recently due to controversy surrounding one of its top-paid podcasters, Joe Rogan . Hydrogen fuel-cell maker Plug Power also is on the list. Stocks related to so