Here are a fund manager’s three overlooked tech stocks with “essential” commodities to weather any economic storm

A rising interest rate environment has made the Nasdaq Composite COMP,
-0.73%
hard to love the past year, but its 22% decline seems to open up opportunities for some.

This brings us to our call of the dayChul Chang, manager of the VTUIX US Equity Institutional Fund of Vontobel,
-1.06%.
He says investors are so busy looking for companies that can handle unexpected macro issues that they’ve overlooked gems with “mission-critical products” that are well-armed for economic downturns.

“We look for sustainable franchises that we believe can outperform their competitors, outpace the market, and get into positions where they will be stronger and bigger on the other side of any macro weakness,” Chang told MarketWatch in an interview on Wednesday.

His fund holds commodities such as Coca-Cola KO,
-0.57%,
and the largest holder of Microsoft MSFT,
-0.77%.

As for these diamonds in the dust, the manager highlights Synopsys SNPS,
-2.01%,
a manufacturer of software tools for the automation of electronic design. Investors are taking a defensive posture, a predictive, good-growth business, Chang said.

“The reason we know through a downside, through an upward cycle, that [Synopsys] going to be sustainable is that they have high recurring revenue that chip engineers need to do their jobs,” he said. “So it’s not a tool that you decide to scrap because you think recession is near in the next 12 months or rates are going to go up.”

Even in 2008 and 2009, when the chip industry actually shrunk, Synopsys saw stable revenue and generated profits, he said. The shares are down 12% this year.

He also likes ServiceNow NOW,
-0.20%,
down 22% since the start of the year. The software publisher and its cloud computing platform is the “main actor” used by companies to systematize their workflow.

“We’re only in the early innings when we talk about digital transformation, so there’s a lot of growth to come just from market share gains in this category,” he said. ServiceNow has expanded into operations, employee management, and customer service management.

“Again, going back to the theme of defensive in times of weakness, this is a company that we believe continues to grow not just from the secular trends it’s seeing, but given the subscription model and the defensiveness of his profile. ,” he said.

Chang’s latest pick is Keysight Technologies KEYS,
-2.41%,
a leading measurement company with “the widest offering of electrical signal or radio signal measurement equipment”, with growth also supported by industry trends. Keysight has fallen 29% this year.

“In this case, 5G, but also what 5G is going to do for the Internet of Things, or AI, or electric vehicles,” he said, noting that Keysight’s tools are used to test electric vehicle infrastructure, batteries, inverters, so there’s a lot of “increasing use that’s just beginning.”

Keysight also sells manufacturing tools, which are used by customers when developing new cars, products or smartphones. So these customers view Keysight tools as “mission critical” and “won’t come cheap,” making it a company “that we believe can deliver double-digit earnings growth over the long term.” did he declare.

The buzz

The Chinese electric vehicle manufacturer NIO NIO,
+3.72%
fell in premarket trading as its second-quarter revenue forecast fell short of Wall Street estimates, although it pared its first-quarter loss. Chinese ADRs have also come under pressure following a report that China’s Securities Regulatory Commission said it was not carrying out work to revive Ant Group’s initial public offering.

Bilibili stock BILI,
+5.99%
plummets after the China-based video-sharing company reported a bigger-than-expected loss.

Twitter TWTR,
+0.77%
would offer Elon Musk a data sharing agreement to settle the Tesla TSLA,
+1.25%
the chief’s doubts about bots on the social media site and advancing the $44 billion acquisition deal.

The European Central Bank meeting is imminent, although few expect a rate hike until July as the bloc battles inflation which hit a record 8.1% year-on-year in May. Next week the meetings of the Fed, the Bank of England and the Bank of Japan will take place.

Calendar data includes weekly jobless claims and household net worth figures later in the day.

Natural gas prices in the Netherlands and the United Kingdom GWM00,
+22.42%
fly away after an explosion in Texas for a major exporter of liquefied natural gas, Freeport. The explosion will cause a shutdown of at least three weeks.

Minhang district in Shanghai (population 2 million) is under strict lockdown and will be mass tested due to COVID outbreak. “Markets naïvely priced in that the easing of restrictions in Beijing and Shanghai was the final victory over omicron, and therefore, peak covid-zero,” noted Jeffery Halley, senior market analyst at OANDA.

The steps

Uncredited


ES00 Equity Futures,
+0.55%

YM00,
+0.49%

NQ00,
+0.62%
are rising, while bond yields TMUBMUSD10Y,
3.028%
withdraw. Oil price CL.1,
-0.19%
oscillate at 121 dollars per barrel, the dollar DXY,
-0.13%
and gold GC00,
-0.31%
are slipping, while bitcoin BTCUSD,
+0.55%
maintains the $30,000 level.

Lily: Oil prices could go ‘parabolic’, putting the global economy in a ‘critical situation’, says commodity trading giant

Stock tickers

Here are the most traded tickers on MarketWatch as of 6 a.m. EST:

Table

Our card of the day is by Michael Cembalest, President of Market and Investment Strategy at JP Morgan Asset Management, outlining trends in the energy transition. It includes a chart that shows how disruptions over the past 20 years have been slower in some sectors of the economy than in others. For example, everyone seems to have a smartphone, but far fewer people than you might think own an electric car.

Random plays

American tourists fined after throw a scooter down the stairs of a UNESCO World Heritage Site in Rome, causing $26,000 in damage.

Late-night talk show host Jimmy Kimmel told President Biden he “has got to start yelling at people.”

The Tik Tok trend mixes sparkling water and balsamic vinegar for the summer the hottest and healthiest new coke.

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