Microsoft, Apple among top tech stocks to buy amid sell-off: Wedbush
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For the vast majority of 2022, tech stocks have been pummeled, due in part to rising interest rates and Russia's invasion of Ukraine resulting in a "risk off" scenario. Many investors have gone into selling mode, but according to Wedbush Securities analyst Dan Ives, smart investors should be focusing on companies that have "significant free cash flow," like Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Salesforce (NYSE:CRM).
In a note to clients, Ives said that "geopolitical shock events," such as the situation that is playing out right now between Russia and Ukraine, have traditionally not been times to panic, but pick up oversold high-quality stocks that get thrown out with the proverbial bath water.
"We believe large cap tech will outperform small caps [along with] a rotation to the tech stalwarts with defensive business model and high [free cash flow]," Ives said. 
In addition to the aforementioned names, Ives noted that Oracle (NYSE:ORCL), Adobe (NASDAQ:ADBE), "core chip names" and several cyber security stocks, such as Palo Alto Networks (NASDAQ:PANW), Crowdstrike (NASDAQ:CRWD) and others are the "safest plays in this turmoil."
Other cyber security names that Ives has mentioned positively include Zscaler (NASDAQ:ZS), Tenable (NASDAQ:TENB), Varonis (NASDAQ:VRNS), Fortinet (NASDAQ:FTNT), CyberArk (NASDAQ:CYBR), Checkpoint (NASDAQ:CHKP) and Sailpoint (NYSE:SAIL).
Apple (AAPL) is perhaps the prime example of a company with strong cash flow, as it generated nearly $47 billion in operating cash flow in its most recent quarter, a record for the Tim Cook-led company. 
Microsoft (MSFT) is another strong example, generating $14.5 billion in operating cash flow in its most recent quarter and $8.6 billion in free cash flow, even as the company spends significantly to grow its cloud business, Azure. 
Oracle (ORCL), which just reported earnings, said operating cash flow for the last 4 quarters was $10.4 billion and its free cash flow over the same period was $6.6 billion. Both results were hit by a onetime litigation charge in the second-quarter, however.
Despite the strong cash flow results, shares of the three companies have fallen this year, with Apple (AAPL) down 13%, Microsoft (MSFT) down 14% and Oracle (ORCL) down nearly 15%.
Most of the other companies have not fared any better, with just Palo Alto (PANW) and CheckPoint (CHKP) showing positive year-to-date returns.
Ives explained that tech stocks are the "most oversold" they have been since 2014 and 2015, and investors are selling in "accelerated fashion." That may work for some pockets of tech, but those that have been sold off due to the Russian invasion, such as Apple (AAPL), Microsoft (MSFT), highlight the need for "defensive tech." Most of these companies have pulled out of Russia, led by Apple (AAPL), and in a "worst case situation" they will see a 1% to 2% decline in revenue as the situation is contained.
"In a nutshell, with oil prices on an upward trajectory and the Fed boxed into more gradual rate increases its as complex of a market and macro backdrop we have seen to navigate," Ives wrote, adding that Microsoft, Apple and Tesla (NASDAQ:TSLA) are the firm's favored disruptive stocks to own. 


Apple (AAPL) recently unveiled several new products, including the iPhone SE, which several analysts have said "buoy consumer interest" for the company's already strong product portfolio.