Value investor David Katz says he'd 'aggressively' buy banks and thinks this tech giant is too cheap

Published Fri, Apr 8 20224:21 PM EDTUpdated Fri, Apr 8 20228:10 PM EDT

Kevin Stankiewicz @in/kevin-stankiewicz-b5593466 @kevin_stank

Value investor David Katz told CNBC on Thursday he's been "aggressively buying" financial stocks during their recent weakness, while also seeing opportunity in a beleaguered tech giant. "We do like the banks a lot right now. We do think that the banks are going to beneficiary by a rising rate environment," the Matrix Asset Advisors president and chief investment officer said in an interview on "Power Lunch." Banks can see a boost to their net interest margin thanks to higher interest rates. Essentially, they can make more money on the difference between what they pay customers for their deposits and what they charge on loans. It's been tough sledding for banks this year, though. The SPDR S & P Bank ETF , which trades under the ticker KBE, is down over 16% in the past three months. Fears of a potential recession in the U.S. is likely keeping investors away from bank stocks, Katz said, even though the Fed is raising rates to combat high inflation. "We don't think we're going to be going into a recession over the next 12 to 18 months," he said, adding: "We would be pretty aggressively buying on this dip." "We don't know that you'll do well over the next four to six weeks, but we do think you'll do very well over the next nine to 12 months," Katz added. While Katz said he thinks a range of attractive banks right now, two specific names he called out are Bank of New York Mellon and Pittsburgh-based PNC Financial . The latter just raised its dividend, he noted. BNY Mellon is "a direct beneficiary of rising rates," Katz said. "They have … tens of billions of dollars in money markets that they're not getting paid on and as rates go up, they're going to start to make some income on that." Other stocks Katz likes Outside of financials, Katz said he sees some attractively valued technology companies, such as semiconductor firm Qualcomm , which trades at just over 11 times forward earnings. He also said Facebook parent Meta is "shockingly cheap" after falling nearly 34% year to date. In February, the company missed earnings and user estimates in its fourth-quarter report, while its guidance for the current period was lighter than expected. That caused a major sell-off in the stock, but at this point, Katz said he believes sentiment around Meta is too negative. "They have an enormous franchise. We're not crazy about management. We're not crazy about the integrity of management in certain respects. However, they have an addictive product," Katz said, alluding to Meta's 3.59 billion monthly active users, as of Dec. 31. The company's heavy investment in the development of the so-called metaverse can go one of two ways, Katz suggested. "Either metaverse is going to work, and they're going to get a return on that investment or it's not going to work, and they're going to stop investing the tens of billions of dollars they talk about," he said. "Either way, the stock does a lot better. It's simply too cheap."

David Katz, CIO of Matrix Asset Advisors.

Adam Jeffery | CNBC

Value investor David Katz told CNBC on Thursday he's been "aggressively buying" financial stocks during their recent weakness, while also seeing opportunity in a beleaguered tech giant.