Several mega-cap tech names outpaced the broader market Thursday. Ritholtz Wealth Management’s Josh Brown has a fresh take on what might be driving the action.
“This is going to be controversial: I think these are consumer staples. They just happen to be digital,” Brown said Thursday afternoon on CNBC’s “Fast Money Halftime Report.”
What To Know: The Consumer Staples sector represents a basket of names that sell products that consumers use on a daily basis, which typically includes things like household and personal products or food and beverage items. Some names that come to mind include Procter and Gamble, Coca-Cola and Walmart.
From Last Week: Top 5 Consumer Staples Stocks That Could Lead To Your Biggest Gains In March
But Brown doesn’t see why companies like Amazon.com Inc AMZN and Alphabet Inc GOOG shouldn’t be included in the bunch.
“Is anything more staple-y that you can think of than Amazon? Like from an e-commerce standpoint,” Brown said.
“Can you think of anything more staple-y let’s say than Alphabet’s core business? 97% of their revenue is some version of Search. Do people search less in a recession? Probably not.”
He indicated that consumers are going to use these products every day regardless of the economic environment. Moreover, they both have huge amounts of cash which makes them even more attractive.
“And in the end, I don’t think consumer behavior really changes much in terms of how time is spent digitally. You got way bigger worries with traditional cyclicals,” Brown said.
“I know we normally don’t think about tech giants as being either defensive or offensive, but I think they’re acting in a fairly defensive way right now and I’m not really that surprised by it.”
See Also: Jim Cramer Says It’s ‘Time To Buy’ Amazon Stock, Suggests JPMorgan Has Inside Information As Analyst Calls For 40% Resurgence
AMZN, GOOG Price Action: At time of publication, Amazon was up 4.11% at $100.15 and Alphabet was up 5.38% at $101.74, according to Benzinga Pro.
Photos: Riekus and Firmbee from Pixabay.
Be First to Comment