With interest rates possibly going higher a tiny 25 basis points, or one-quarter of 1%, as early as Thursday, many investors are wondering how the markets will trade over the next year or so in a period of slowly rising rates. The sector that does the best in a rising rate environment, after energy, is technology, and there is a trove of quality big cap tech stocks at bargain prices right now.

We screened the Merrill Lynch stock coverage universe for quality large cap technology stocks that have been marked down in price during the recent sell-off and increased market volatility. We found four that are rated Buy at Merrill Lynch that fit the bill perfectly.

Cisco

This is the top mega-cap technology stock pick on Wall Street and perhaps a surprising defensive pick. Cisco Systems Inc. (NASDAQ: CSCO) posted outstanding earnings in August, and many on Wall Street have raised their price targets for the networking giant significantly higher. Cisco is also one of the 24/7 Wall St. top 10 stocks to own for the next decade.

Analysts across Wall Street point to an estimated double-digit bookings momentum for Cisco’s Meraki Cloud Services. Many think that Meraki is likely to be a $1 billion plus run-rate business this year, with an incredible 50% to 70% compounded annual growth rate. A jump from 40 GE to 100 GE data center switching, and next generation security are also adding to the total sales profile and product mix.

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Cisco investors are paid a very solid 3.22% dividend. The Merrill Lynch price target for the stock is $32, and the Thomson/First Call consensus target is lower at $31.09. Shares closed Wednesday at $26.07, down over 10% since the earnings report.

EMC

This company may be in for big changes. EMC Corp. (NYSE: EMC) is technology’s large-scale storage leader, but new avenues of flash and other storage opportunities are grinding away at the tech giant’s business. The good news for the company is that storage demands are accelerating, and the company’s majority ownership of VMware gives it a virtualization infrastructure solutions product that includes a suite of products designed to deliver a software-defined data center (SDDC) run on industry-standard desktop computers and servers.

While the VMware stock is on the balance sheet, the earnings are not, so some Wall Street analysts feel that the company may buy the rest of VMware it does not currently own or even consider a merger with HP Enterprise, a spin-off from Silicon Valley icon Hewlett-Packard. This could add growth and revenues for both companies. Others think NetApp could also be a target for EMC.

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EMC shareholders are paid a 1.85% dividend. Merrill Lynch has a $32 price target, and the consensus target for the stock, which has had a lousy 2015 to date, is $29.39. Shares closed Wednesday at $24.86.
Intel

This top chip company has been in the doghouse on Wall Street all year, and the second-quarter positive earnings report certainly has helped to lift the investor pall hanging over the company. Intel Corp. (NASDAQ: INTC) is regarded as having among the highest shareholders cash returns at approximately 8%, but it has lagged high-growth specialty chip stocks. The iconic chip giant had a stellar 2014 on the tailwind from continued PC and notebook sales, but this year has been a far different story. Despite the most recent earnings report, the stock is down a gigantic 18.2% year to date.

Intel purchased chip rival Altera for a massive $16.8 billion. Some on Wall Street view the deal pessimistically, citing its high cost, aggressive growth assumptions on the part of Intel and the increase in debt. Others feel the addition will help Intel start to move away from the PC dependence. The pending acquisition would put Intel into the traditional fabless market of programmable logic devices, but ultimately by 2020 50% of Altera’s product line could be manufactured at Intel facilities.

In addition, many analysts think that the company’s new 3D XPoint chip, a collaboration with Micron Technology, could be primarily In-Memory compute in servers, and its launch should coincide with Intel’s Purley platform server launch in 2016. This is another huge positive step-out from PC dependence.

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Intel investors are paid an outstanding 3.23% dividend. The Merrill Lynch target price is $33. The consensus target is $33.43. Shares closed Wednesday at $29.77.

Oracle

This old-school large cap tech stock is very reasonable valuation-wise for investors, but turned in earnings that missed Wall Street estimates again. Oracle Corp. (NASDAQ: ORCL) trades at 14.6 times estimated 2016 earnings, and still provides solid free cash flow yield.

Oracle plans to make almost all of its services available via the Internet by mid-October, as the database-software company changes its business model to fit a new competitive landscape. Around 65% of Oracle’s products now are available on the cloud, and that is expected to climb to 95% by the time the company holds its annual Oracle OpenWorld conference in October.

The stock is down 11% so far this year, and many on Wall Street expect version 2 of the 12c database to drive an Exadata product cycle, and the do not believe that’s sufficiently discounted in the stock. Some firms did lower the near-term cash flow estimates because of the cost of the very aggressive move to the cloud, but they are boosting long-term growth. Merrill Lynch sees it as a solid buy at current trading levels.

Oracle investors are paid a 1.57% dividend. The Merrill Lynch price target is $48, and the consensus target is $47.25. Shares closed Wednesday at $38.27.

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Buying big cap quality technology stocks at current prices is almost a no-brainer for aggressive growth accounts. All these old-school tech monsters have long-term solid track records and the deep pockets and expertise to acquire smaller companies in tandem with organic growth to drive shareholder value.

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