The sell-off in tech stocks may not be over yet, but these high-quality stocks are already cheap

Tech stocks have been struggling at the beginning of the year, with equity analyst Toni Sacconaghi saying there are some stocks in the sell-off that investors should consider — and avoid.

The Bernstein analyst said in a note Wednesday: "The recent rotation of tech stocks from growth to value has been very rare. The most expensive fifth of tech stocks plummeted. "

High-growth tech stocks have fallen as investors prepare for the Fed to raise interest rates and tighten monetary policy in response to inflation. Growth stocks are trading based on a promise of huge gains in the future, so tech stocks are often vulnerable to rising interest rates due to their high valuations.

"What happens to expensive tech stocks is arguably not entirely surprising. While interest rates may be a catalyst, the root cause is that valuation multiples for expensive tech stocks are expanding too much, especially in 2020," Sacconaghi said.

The analyst noted that 95 percent of the most expensive tech stocks are unprofitable.

"So, will there be more pain in high-priced tech stocks? It's possible," Sacconaghi said.

The analyst said investors should opt for lower-priced, valuable tech stocks while being cautious about expensive, low-quality tech stocks.

Take a look at five names on Sacconaghi's list of cheap, premium tech stocks.

Some of the stocks in the value technology camp are semiconductor companies. Intel (INTC) and Broadcom (AVGO) are among the options for Sacconaghi.

Facebook's parent company, Meta (FB), also made the list after a slump caused by earnings. The stock price is down about 30% in 2022.

Among the analysts' bullish stocks are computer peripherals maker Logitech and automation company Teradyne (TER).

According to the Bernstein analyst, he's not bullish on five expensive low-quality tech stocks.

Ride-hailing app Uber (UBER) is on the list. The company's fourth-quarter results beat analysts' expectations and said it had begun to rally from headwinds caused by the recent surge in confirmed numbers of outbreaks.

Also on the list is streaming platform Spotify (SPOT), which has recently come under fire over controversy surrounding one of its highest-grossing podcasts, Joe Rogan.

Hydrogen fuel cell manufacturer Plug Power (PLUG) is also on the list. Stocks related to solar and "clean" energy have had trouble stock prices this year.

Social media platform Snap (SNAP) and communications solutions company Twilio (TWLO) also appeared on Bernstein's list.

This article originated from the financial world