Tech giants. They’re among the market’s most sacred cows. Maybe more so since Covid entered our lives. But now and more than ever, when it comes to three of these corporate titans, don’t think for a minute they’re not also well-positioned, large-cap stocks to sell.
It’s a new year and a time when buy recommendations and above-the-market prognosticating is all the rage. I’m referring to financial porn like “7 Stocks to Own Forever,” “3 to Hold Until You’re Old” and all that sort of nonsense.
But today it’s particularly important to not lose sight of where we are and how we got there. Bulls and bears make money, but pigs generally get slaughtered.
Following back-to-back years in which the U.S. market soared to new heights with technology companies saving the day or at least making our lives much easier than otherwise during Covid, many large-cap tech stocks have found an even more precious place in many investors’ portfolios.
Today and amid the Roaring ‘20s festivities still playing out in the S&P 500 and Dow Jones Industrials, let’s look at feverish signs in three large-cap tech stocks with a slant to sell or reduce exposure, rather than commit to the season’s more bullish forecasts and recommendations:
Large-Cap Tech Stocks to Sell: Microsoft (MSFT)
The first of our large-cap tech stocks to sell are shares of Microsoft.
Following 2020’s stellar rally, MSFT stock scored big with investors again last year. Microsoft gained 52% through a series of ever higher all-time-highs before finishing a handful of percentage points beneath late November’s most recent and greatest achievement.
Now priced just south of $2.6 trillion, a fairly steep forward P/E of 37.45 and a lofty sales ratio of about 15x that’s near a 10-year high, the market’s second richest stock is also justifiably a large-cap stock to sell.
There’s some agreement working its way into MSFT stock as well on the monthly price chart.
Technically, this large-cap stock to sell has established a confirmed topping pattern that’s backed by a weak-looking a bearish stochastics pattern.
If I were to offer a longer-term price target, I’d estimate MSFT could challenge a band of Fibonacci support from roughly $180-$210 before offering buyers more attractive pricing off and on the price chart.
The next of our large-cap tech stocks to sell is NVIDIA.
The semiconductor giant is even more of a sacred cow on Wall Street these days than MSFT stock. And similarly, NVDA stock looks ominously feverish in its pricing.
On the heels of 2021’s monster 126% rally, this large-cap tech stock to sell is priced close to a whopping $700 billion. This tech darling also sports a steeper price multiple of 31.5x sales that’s around 10-year highs.
I can hear all the “but, but, but” excuses defending Nvidia’s stretched valuation. It’s chips are in all the hottest markets. From A.I. to driverless cars, cryptos, gaming and even the new buzzword du jour, the metaverse, Nvidia is kicking butt.
But that doesn’t make NVDA stock a buy at any price.
And today’s price is a steep one, especially in conjunction with a pair of completed Fibonacci-based two-step patterns formed over Covid, a bearish monthly stochastics setup and December’s inside topping candle.
Looking ahead, a retracement towards $160-$205 is where I’d see better value in this large-cap tech stock to sell.
Large-Cap Tech Stocks to Sell: Amazon (AMZN)
The last of our large-cap tech stocks to sell are shares of Amazon.
Since Covid, if there was one entity that helped us with all of our essential and non-essential needs and wants, it’s Amazon. And god only knows, or rather Jeff Bezos, Covid or otherwise, Amazon is only going to continue growing.
And for a company of AMZN stock’s size, it rallied with the best of them in 2020 as Wall Street cheered all those goods delivered, web services and movie streams made possible by this large-cap stock to buy.
But at $1.75 trillion, a forward P/E of 54, PEG ratio in excess of 2.0 and earnings cratering by 50%, AMZN’s barely worth mentioning return of about 6% for the past twelve months looks increasingly like a bearish tell.
With a second failed base breakout resulting in a bearish topping candle in November that’s about to be confirmed and AMZN’s monthly stochastics rolling ominously over, this large-cap stock to sell looks like a gift that’s going to keep on giving to bears in 2022.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.