High-growth technology stocks have faced selling pressure in recent months as investors anticipate a rising-rates environment in 2022. Rising interest rates lead to higher bond yields, as seen with the recent surge in the U.S. 10-Year Treasury Yield.
Although Jim Cramer said he has avoided buying stocks in the tech sector since late November, he put an end to the hiatus with his purchase of Marvell Technology Inc (NASDAQ:MRVL) Monday.
"We think MRVL’s decline is getting overdone," Cramer said Monday in a letter to members of CNBC's "Investing Club."
Cramer reminded club members that he trimmed his Marvell position around $92 at the beginning of December after the stock rallied roughly 30% in three days.
"This was a tough sale to make because of MRVL’s peer leading growth rate and exposure to secular themes in the cloud, 5G and auto — but our discipline said it was time to book profits after a rally of that magnitude," Cramer said.
From Last Week: Read Why Needham Chose Marvell As Top Semiconductor Pick
Selling some of his Marvell position turned out to be a prudent move. The stock is trading below $80 per share at time of publication.
"What a great example of how discipline trumps conviction," he said.
Cramer told Investing Club members that he plans to buy some of the shares back today for the same reason he sold: discipline.
It was time to book profits when the stock rallied too fast and it's time to start buying now that it has sold off too quickly. Marvell is down about 11% over a five-day period.
"If you are trying to figure out where to put some money to work with so many stocks down, we like the setup of buying a high-quality, profitable, secular winner down as it goes out of favor just like MRVL has," Cramer said.
MRVL Price Action: Marvell has traded as low as $37.92 and as high as $93.85 over a 52-week period.
The stock was down 2.83% at $80.76 Monday afternoon.
Photo: courtesy of Marvell.
