As Nasdaq goes negative for the year, watch out if you own these high-multiple shares
The tech-heavy Nasdaq Composite just went negative for the year and fell into a 10% correction on an intraday basis, so investors still chasing high-multiple names in the index could get burned further if the downtrend continues. Following a 2.2% drop in the technology-heavy index, the Nasdaq Composite went negative for the year on Thursday. The Nasdaq Composite is now down 1.5% for 2021, pressured by rising interest rates exposing the high valuations of many of the index members. The U.S. 10-year Treasury yield rose to 1.54% on Thursday and Federal Reserve Chair Jerome Powell failed to soothe investors that the central bank would take any measures to temper the volatile bond market. High multiple stocks, more specifically equities with high price-to-sales ratios, can be at risk of compressed valuations when rates rise and reduce the value of future cash flows. Rising rates also impact how cheaply a company borrows money, a practice tech companies rely on in order to invest in themselves and their growth products. "You can't have a rally in these high-multiple stocks unless you reverse some of the 50 basis points increase that we've had in the Treasurys since the year started," CNBC's Jim Cramer said on "Squawk Box " on Thursday . "I don't think you even have to look at the stocks. All you've got to do is look at the bond." "These high-multiple stocks that did really well during the pandemic don't really have underpinnings," Cramer said later on "Squawk on the Street. " "Even though they're doing well, you'd much rather buy Boeing." CNBC Pro screened for stocks that investors should watch out for in this rising rate environment. All the names are in the Nasdaq-100 and are ranked by price-to-sales ratios based on 2021 estimated revenue. Plus, we screened for the high-multiple stocks that are not well-loved on Wall Street, with more than half the analysts covering them saying not to buy. Cramer said the rise in yields has put companies like Tesla up against a wall. Tesla has a 12.4 price-to-sales estimate for this year, according to FactSet consensus. Only 23.5% of the analysts that cover Tesla recommend buying the name. Shares of Telsa have run up about 330% in the past 12-months but have pulled back recently with the uptick in rates. Other high-multiple tech names on CNBC's list include Zoom Video , Verisign , Ansys , Xilinx and Advanced Micro Devices . Zoom Video is up 200% in the past year as the video conferencing company emerged as a major winner from the pandemic. The company posted better-than-expected earnings and revenue this week; however, Zoom Video's finance chief Kelly Steckelberg said she expects higher churn rates to persist as people start to travel more. Plus, only about a third of analysts that cover Zoom recommend buying the stock at these levels. Intuitive Surgical , Illumina , Booking Holdings , Texas Instruments and Maxim Integrated Products are also on the list. Verisk Analytics , Paychex , Check Point Software and KLA are also risky plays as rates continue to rise. — with reporting from CNBC's Kevin Stankiewicz. Disclosure: Cramer's charitable trust owns shares of Boeing.

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