These 3 beaten-down tech stocks are so bad, they’re good, strategist says

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Trouble in the tech space has created some timely buys, according to one expert.

The broader technology sector has shed more than 6% in the last month as concerns around the U.S.-China trade war affecting the U.S. tech industry took hold in the stock market. Semiconductor companies have been among the biggest losers, with Nvidia shares falling more than 22%.

But parts of the tech space have now gotten so bad that they actually look good on an investment basis, Matt Maley, equity strategist and managing director at Miller Tabak, said Tuesday on CNBC’s “Trading Nation.”

“Some of them look quite good here and really washed out, and I think there’s a good chance that they’ll bounce,” he said.

Nvidia, which manufactures semiconductor chips for graphics, gaming and artificial intelligence capabilities, was his first pick based on some positive signs in its stock chart.

“Here’s a stock that, in the last couple of days, has tested its 200-week moving average. That line provided excellent support back in December and the stock … [is] incredibly oversold,” Maley said, citing the low levels on its momentum-focused relative strength index indicator. “I think it’s going to bounce back quite strongly over the next few days, or even the next couple of weeks.”

Maley saw a similar situation occurring in Google parent Alphabet, which recently tested a trend line from 2015 and also appeared to be oversold.

“I think it will hold that line and bounce back nicely as well,” he said. “But one that’s a little bit more dicey is Salesforce. “

The technical expert hesitated to make a definitive call on Salesforce ahead of its Tuesday evening earnings report, noting that the stock recently broke below its 200-day moving average, typically a bearish sign.

But, he said, “if they can get a good earnings report out, it should snap right back,” a prediction that played out after Salesforce beat earnings and revenue estimates and saw its stock pop in after-hours trading.

If the breakout is meaningful, it will give Salesforce shares “another 10% [of] upside,” Maley said. “So that one’s a little bit more dicey … but the other ones I think are so washed out that the rally that we’ll see in these names will last them more than just a day or two.”

Chad Morganlander, portfolio manager at Washington Crossing Advisors, wasn’t as bullish on the high-growth tech space.

“As we look at the big picture, the global growth perspective [is] that many of these growth stocks are going to underperform over the next three to six months. So, we would actually advise investors to look towards large-cap value at this point in the market cycle,” he said in the same “Trading Nation” interview.

Morganlander worried that what he saw as stretched valuations for big-cap tech companies could cause analysts to taper their expectations for upcoming quarters, with global growth worries providing additional overhang.

“If global growth starts to decelerate as you’re seeing, then that’s going to be more of a multiple compressor to these big tech names,” he said. “So, yes, there are seams of opportunity within growth, but … we would recommend that you overweight value over growth.”

Salesforce was up nearly 4% midday Wednesday as investors digested as investors digested its better-than-expected fiscal first-quarter earnings. Nvidia and Alphabet shares both fell more than 1%.