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These 2 Stocks Might Be The Best Way To Play The Market’s Rotation Out Of Big Tech

These 2 Stocks Might Be The Best Way To Play The Market’s Rotation Out Of Big Tech

As the market rotates out of big tech names, these 2 stocks look like promising bets on the economic recovery ahead.

The market has had an interesting week.

On Monday, news broke that Pfizer (NYSE: PFE) and BioNTech’s (NASDAQ: BNTX) coronavirus vaccine is 90% effective at preventing the deadly virus.

The encouraging news sent most stocks rallying higher. But many of the stay-at-home and big tech socks slipped lower, with names like Peloton (NASDAQ: PTON), Zoom (NASDAQ: ZM), Amazon (NASDAQ: AMZN), and Netflix (NASDAQ: NFLX) all sinking.

Even as the stay-at-home trend looks to be losing steam on recovery hopes, Strategic Wealth Partners’ president Mark Tepper says some stocks in the group could still have some upside ahead.

“Investors are realizing… we’ve experienced some structural changes in our lives and in our economy and we’re never going to go back 100% to the way we were in 2019,” Tepper said. “So, I would actually be looking at this as a buy-the-dip opportunity on all stocks that were working this year.”

One stock Tepper is especially bullish on is Stamps.com (NASDAQ: STMP).

“The company that I have the most conviction in right here, right now is Stamps.com, because e-commerce, that’s not going anywhere,” Tepper said. “And this is really our derivative play on e-commerce. It’s basically Amazon for your mom-and-pop small businesses, not just shipping but also warehouse solutions as well, so I think right now you’ve got to buy the dip.”

While Stamps.com shares have gained 126% year-to-date, the stock has dropped -30% over the last month and more than -25% in the last week alone. 

The online postage company delivered a massive earnings beat last week, reporting earnings per share of $3.83—more than twice the $1.53 per share expected by analysts—on revenue of $193.9 million, up 42% year-over-year.

Stamps.com also reported GAAP net income per share of $3.30, up 528% year-over-year, and GAAP net income of $64 million, representing 599% growth from the same period last year. 

”Our third quarter results continued to demonstrate the value of our best-in-class shipping technology utilized by our eCommerce shipping customers throughout the world. Our technology solutions serve a broad variety of eCommerce customers, and facilitate their operations at a critical time as they adapt to new consumer purchasing behaviors and demands,” said Ken McBride, Stamps.com’s Chairman and CEO in the earnings release. “We are extraordinarily proud of our employees around the world who have adapted so well to various new workplace dynamics while also driving innovation and excellence under very difficult circumstances. We continue to believe we are well positioned in our pursuit of becoming the leading worldwide multi-carrier eCommerce shipping software company.”

But despite the better-than-expected results, the stock was down due to valuation. Even if Stamps.com maxes out its projected earnings in 2020, at Thursday’s closing price of $188.76, the stock is valued at more than 23 times earnings, which some investors might find a little rich. 

Beyond Stamps.com, TradingAnalysis.com founder Todd Gordon believes there’s opportunity in the banking sector as the economy recovers from the coronavirus pandemic.

“We’re seeing a move higher in yield—pretty impressive back up yields—helping banks, especially regional banks, plus we’re seeing a higher regime in the VIX, and keep in mind we’re coming off like a decade low in like a 12/13/14 VIX, we’re settling in 20/25/30, and investors know they need help… from professional money managers,” Gordon said.

One bank stock in particular Gordon is bullish on now is Morgan Stanley (NYSE: MS).

Source: TradingView.

Pointing to the chart, Gordon noted that Morgan Stanley shares are beginning to break above a long-term trend line stretching back to 2000. 

“Interesting potential breakout here in Morgan, plus it’s yielding 2.5%, so I’ll just go there for now,” Gordon added.

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