The market sell-off has created a buying opportunity for investors who can afford to be a little patient, noted value investor David Katz told CNBC on Tuesday.
Stocks continued to dropon Tuesday, with the Dow Jones Industrial Average wiping out its gains for the year. Meanwhile, about 40 percent of companies on the S&P 500 are now in a bear market, defined as being down 20 percent from recent highs.
“We think there are a lot of great buys here we would be buying if you have a six- to 12-month” timeline, Katz, chief investment officer at Matrix Asset Advisors, said on “Power Lunch.”
His top picks included two tech stocks and one in the oil services arena.
One of Katz’s tech picks, eBay, is down more than 25 percent on the year and is up about 6 percent from its 52-week low, hit during the October sell-off.
“Earnings are going to rise nicely next year and then accelerate thereafter,” Katz said. “So, you’re getting a very good business at 12 times earnings and, generally, that’s a really good way to make money.”
After a 7 percent drop Tuesday ended four days of gains, oil is now in a bear market. Katz predicts that the sector will rise over the next three months, helping to pull oilfield services company Schlumberger out of its 28 percent fall this year to a 10-year low.
The stock “pays a 4 percent dividend and [has] really good management,” he said. “We think as oil comes back this is due for a great catch up. We think it’s got 30 percent upside easily.”
Google parent Alphabet is a good opportunity, selling at 18 times earnings, Katz said.
The Mountain View, California-based company, part of the FAANG group (Facebook, Amazon, Apple, Netflix and Google), could “navigate regulations” that are in the headwinds of cloud and data-based services, he said.
Earlier this year, European Union regulators slapped Alphabet with a fine of 4.34 billion euros (about $5 billion) for breaching the bloc’s antitrust rules.
“We think you buy here,” he said. “If it goes down any more, you buy again. A year from now, we expect it to be 20-30 percent higher.”
Disclosures: Matrix clients and Katz own all recommended securities.