Citi’s Bitterly Sees Buying Opportunities in Tech Stock Rout

(Bloomberg) -- The drop in technology stocks has created the chance for market-beating returns for investors willing to ride out a volatile start to 2022, says Kristen Bitterly, head of capital markets in the Americas at Citi Private Bank.

“Out of the Nasdaq 100, you have 38 single stocks down 20% or more from their 52-week highs and 65 have dropped more than 10%,” Bitterly said in an interview Monday on Bloomberg TV’s Surveillance. “Right now, you can get a double-digit yield to buy into that at a 5%, 10% pullback from these levels.” The Nasdaq 100 Index dropped almost 4.5% in the first week of the year.

Bitterly says investors should focus on quality companies in sectors such as cybersecurity and payments where earnings growth is expected to be sustained. She cautions that volatility will persist through early 2022 as the Federal Reserve’s inflation fight means higher rates and less liquidity for financial markets.

“The challenge that investors have is really delineating what their time frame is,” said Bitterly. “I think individual investors have that benefit of trying to take the long-term view.”

Companies reporting fourth-quarter earnings in the next few weeks could provide support to the market because of “record-high profitability,” she said. 

“It’s not just about what happened in Q4, it’s the forward-looking guidance that we will also get from those management teams that have previously held back. If you’re able to withstand some of the pricing pressure, some of the supply chain disruptions, those are the quality companies that we want to be invested in and that we have been investing in. That’s really our positioning for 2022.” 

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