Four stocks in the S&P 500 — Nvidia, Broadcom, Reynolds American and Fiserv — have risen by more than 15 percent in each of the last four years. In 2017, the four are rising even faster: more than 20 percent.
Nvidia has seen explosive gains, having risen over 1,000 percent since 2012 as semiconductor demand has soared. Broadcom, another semiconductor name, has seen steady gains over the last several years. Tobacco manufacturer Reynolds American has posted consistent gains since 2013, including a 90 percent advance last year. Fiserv, which operates in the financial technology space, has risen over 49 percent year to date.
At these levels, some strategists recommend taking profits and moving to other plays.
“When you have huge gains like this, you can take some off the table. It’s not an all or none thing. You can take some of your profits, and let the thing ride a little bit,” Miller Tabak equity strategist Matt Maley said Wednesday on CNBC’s “Trading Nation.”
Maley pointed to Nvidia. Should investors sell 15 or 20 percent of their Nvidia shares, given that the stock has enjoyed such a meteoric rise, “you’ll get 100 percent back of your initial investment, and still have an 85 percent position, which would be 100 percent pure profit.”
As for the four standouts, S&P Global portfolio manager Erin Gibbs recommends that investors look elsewhere because technology names have recently seen notable outflows and may not continue to outperform.
“There was just this huge outflow coming from hedge funds, and they tend to be the leaders when you look at which sectors they’re investing in. That was the first crack,” she said.
Gibbs pointed to hedge fund flows in the first quarter and the fourth quarter of 2017; in the first quarter, hedge funds were selling off tech stocks “like crazy,” she said. On a retail level, technology exchange-traded funds have logged outflows in the past few weeks. Overall, Gibbs said she is beginning “to see some money moving away from technology.”