Now's The Time To Buy Tech Stocks Despite Poor 2016

Broadly speaking, 2016 has had a rough go of it thus far, and the technology sector in particular has experienced ongoing disappointments, off at a turtle's pace this year compared to its relative outperformance in 2014 and 2015.

Despite the disenchanting performance so far in 2016, BMO Capital Markets believes the fundamentals for the space remain intact.

Technology Is Still King

Brian Belski, Nicholas Roccanova and Nicholas Amicucci commented in a recent investment strategy note, "[W]e do not believe the poor performance is a reflection of any fundamental problems."

"Rather we believe investors are using the sector for profit-taking given its aforementioned outperformance and the current uncertain environment. As a result, Technology remains a top sector pick for us and we reiterate our Overweight stance at current levels."

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The analysts then highlighted three main points supporting their Overweight sector thesis:

• 1. "Valuation levels remain at historical absolute and relative discounts."
• 2. "Although the earnings outlook has cooled a bit, it remains solid nonetheless."
• 3. "Analysts remain optimistic regarding sector prospects despite recent struggles."

Based upon these three points, the analysts offered the following foci:

• For GARP, the analysts recommend technology hardware, storage and peripherals;
• For Value, communications equipment;
• And for Growth, Internet software and services.

Top names and ratings within the sector include:

• Apple Inc. AAPL at Outperform
• Cisco Systems, Inc. CSCO at Outperform
• Facebook Inc FB at Market Perform
• Alphabet Inc GOOGL GOOG at Outperform

The analysts concluded, "[W]e believe that given heightened concerns about the global economic environment, investors have used Technology's strength over the past few years as an opportunity to take profits in an uncertain environment. Therefore, we reiterate our Overweight stance and would recommend that investors use the sector's recent weakness as an opportunity to add exposure within portfolios, and especially for certain Technology industries."