Facebook, Amazon, Google, Netflix, Apple
The FAANG stocks are 5 key stocks every investor should know. They’re the largest capitalized stocks on the S&P or NASDAQ. Given their stability, security, and persistent profitability, they’re a primary tech stock pick for most institutional investors and those with 401k or rrsps.
The group was named by Jim Cramer of Mad Money fame.
Overall, the 2020 forecast for FAANG stock prices is positive for most of Jim Cramer’s FAANG stocks, but each has its own head winds. Apple and Amazon were down, Netflix fell hard, but each has been resilient. Apple stock price is at all time highs. See charts below.
Should you buy FAANG stocks. Some experts believe you should buy then and never sell. If you’re a long term investor, it is reasonable that these companies will come out shining through any economic outlook. It seems the economic outlook for the next 5 years is bright. But there is a lot to know about each one. Netflix’ woes in the video streaming wars warns of the dangers of competition — devastating losses.
Some analysts are turning negative on the FAANG stocks. They’re suggesting small business stocks will have greater earnings growth from 2020 to 2024. These companies are cash rich, have consumer data, and innovative business models that will help them adjust in any trade climate. There are almost 40 FAANG ETFs you might buy as well. Check the performance.
It was believed that “America First” policies would destroy multinational profits, but the FAANG stocks could survive nicely with unlimited growth in the US. The recent earnings reports released by Google, Apple, Amazon, and Facebook, show the threat to multinational marketshare and profits has been overplayed.
The markets and economy are good for US based businesses ready for 2020, but for those exposed to International trade and offshore production (25% tariffs), the road is really uphill. That increase in costs and FAANG resistance to repatriating manufacturing to the US, is making investors jittery about the markets. Take a good look at Facebook’s stock forecast and Google and Amazon are adjusting and you have to feel less nervous about investing in them.
Investor’s Negative Outlook on FAANGs
The FAANG stocks were doing fine until the China tariffs set in. Earnings season brought everyone back to earth and either the FAANG companies didn’t want to pay out, or investors realized their China exposure was a big sell sign.
As you can view in the chart below, FAANG stock Netflix is in particular trouble. It’s sunk twice in the last 3 months and it’s the most confusing situation for stock market investors. Netflix reported 34% growth in revenue including revenue of $4 billion during the 3rd quarter, compared to analyst estimates of $3.99 billion.
Equity Research managing director David Miller says Netflix can be cash flow positive by 2020 and he forecasts a 12-month target price of $503 per share.
The Internet television network paid 89 cents earnings per share (EPS) for the last quarter, 68 cents better than the 21 cents forecast by stock analysts. And they’ve just announced billion dollar content development plans. It all looks pretty good, so what could possibly be causing Netflix’ price decline?
With earnings down, investors feel Amazon won’t do well this Xmas season either and its valuations have fallen. Quarterly earnings for Amazon are consistently above $50 billion and some predictions for 2019 are very strong ($11.81 for 4th quarter of 2019 compared to 3.33 reported this last quarter). Marketbeat sees a earnings payout for 2019 of $31.66 per share.
Betting against Amazon, given the shift to online shopping and cloud computing is probably not wise. Investingdaily has a thorough look at and forecast for Amazon. It’s flush with cash and into all sorts of things.
Google – Alphabet
Google’s revenue growth is the key issue for Google stock price for many investors, as it’s all about future earnings. Other companies appear to be more attractive, and the competition might be the big story of 2020.
If the monopoly type companies under perform, the talk about anti-monopoly action might die down. However, these companies have plenty of threats during a highly volatile, transitionary economy. Take a look at Longforecast’s Google outlook for 2019.
Apple’s fortunes have fallen quickly. Revenue’s continue to fall although the company is making adjustments with a focus on services. Apple stock price just hit an all time high. Apple’s cost control issues foretell vulnerability to big stock market corrections or perhaps a market crash in 2020? Still, take a look at Moneymorning’s prediction that Apple’s stock price would reach $300 by 2020.
Facebook stock price has had a steady decline since last summer. Last year Facebook missed projections and the stock price plummeted 25%. Facebook has a huge customer base and they don’t share revenue with anyone almost, unlike Google who pays out revenue share to publishers.
Some feel Facebook is massively undervalued and it may only be the limited imagination of its management that’s stopping it from big growth. It’s looking to buy an internet security company to help it avoid data breaches. Hear Paul Schatz, Heritage Capital president and chief investment officer bullish outlook of $200 per share.
Bloomberg Report on FAANG Performance and Predictions
FAANG Analysis – Ramy Inocencio reports on Bloomberg Daybreak: Asia
Just because business is moving back to the US, doesn’t mean the FAANGs can’t make mountains of money. Given the lack of political will in the US to control them, they’ll likely adjust and become super monopolies.
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* the above post includes opinions of the author and do not connote recommendations of any kind regarding stocks to invest in. The material is provided as information only.