Barclays owns dozens of stocks that share similar characteristics to the tech giants, as it navigates a market that remains highly concentrated but ripe for stock picking, dominated by Big Tech. Stock prices fell in April after rising for five consecutive months. The S&P 500 fell 4.2% for the month, its worst monthly performance since September. However, a select group of Big Tech stocks held up fairly well during the decline, with stocks like Alphabet and Apple bucking the downtrend. Barclays noted that this “very narrow leadership” makes it difficult for investors to outperform benchmark indexes, with only about 15% of U.S. equity mutual funds beating the overall market's return of 25% last year. Barclays analyst Venu Krishna said Big Tech's valuations still look reasonable, but he noted that Big Tech is “not the only game in town” and that investors are looking to outperform their benchmarks. He suggested diversifying your portfolio. “Sector and pairwise stock correlations remain at historic lows, suggesting fertile ground for active management,” Krishna said in a note Tuesday. “Institutional exposure remains highly concentrated in Big Tech.” “To ‘broaden’ revenue streams, seeking elements of Big Tech’s fundamental characteristics outside of the rest of SPX (and beyond) is a good starting point for dealing with concentrated markets.” How to Find Alternative Stocks To find the best group of Big Tech alternative stocks, Barclays screened the top 3,000 U.S. stocks to find the big tech stocks with the best risk-reward ratios. We narrowed down the basket to 50 stocks with similar fundamentals. The company says these stocks not only offer diversification for investors, but also have strong fundamentals based on profitability, balance sheet strength, convertibility and growth-adjusted valuation characteristics. , which he says is very similar to Big Tech stocks. Here are some recommended Barclays products that fit this criteria. Chipotle is one of Barclays' top picks with the highest year-to-date increase, as its Burrito chain's stock is up a hefty 39% this year. Shares rose 9.4% in the quarter, driven by the company's strong earnings, better-than-expected revenue and higher same-store sales from the first quarter as restaurant traffic increased during the period. UBS analyst Dennis Geiger was impressed by the April 24 quarterly report and raised his price target by $100 to $3,500. “We expect first-quarter sales and earnings results, attractive brand positioning, and better than expected expectations to support further stock price appreciation,” Geiger said in a note Thursday. “CMG maintains the highest quality growth in the sector with top-class traffic momentum and a resilient customer base, and in our view, even after outperforming year-to-date, The company still offers attractive returns at its valuation.'' Software company Oracle and computer networking giant Arista Networks also made the list. Shares of both companies have risen about 10.5% this year. In an April 23 note, JPMorgan named Arista as a top candidate for artificial intelligence, saying that “optimism surrounding a shift to non-AI due to recovery is too early to justify.” The company believes Arista is well-positioned in the cloud and AI space and has the potential to grow its share among enterprise customers over the long term. Away from the tech space, Barclays also cited retailers Ulta Beauty Inc. and TJX Companies, which owns TJ Maxx and Home Goods, as stocks with strong fundamentals that could expand investors' portfolios. Ta. Both stocks struggled in the quarter due to a broadly cautious outlook on consumer discretionary spending habits, with Ulta stock down more than 17.5% since the beginning of the year, while TJX stock is up just 0.4%. Indeed, Barclays analyst Adrian Yee downgraded Ulta's stock on Monday amid increased competition in brick-and-mortar stores, but said he's holding firm on the stock over the long term. Alta stock has fallen more than 17.5% since the beginning of the year. “In the short term we are moving to the sidelines with a more cautious view. In the long term, ULTA is a specialty multi-brand retailer with a best-in-class business model in the beauty sector that will grow in the long term.” It is one of two companies,” Yih said. Despite a rocky start to the year, Goldman upgraded TJX from Neutral to Buy on April 24, calling the company a “market share winner” in a value-conscious consumer environment. As a result, I became bullish on the stock.
