Star Performer FAANG Stocks

  • Dec 16, 2018 AEDT
  • Team Kalkine
Star Performer FAANG Stocks

There is a growing heat among investors, analysts and experts over the start performer FAANG stocks and their growth potential in the future.

The five stocks forming FAANG are Facebook (NASDAQ: FB), Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), Netflix (NASDAQ: NFLX) and Google parent Alphabet (NASDAQ: GOOGL). They collectively account for 42% of the NASDAQ 100 with Apple having the highest contribution of 12%.

All the companies are the most popular tech companies with the total market cap of US$3.015 trillion. To compute the collective impact these stocks, have on the market, Wall Street grouped these companies into one acronym FAANG.

Fundamental Analysis:

     5 Year CAGR                                                          (in billions)

Sales Latest FY 40.65 111.02 265.81 11.69 177.87
5-yrs ago 7.87 59.73 183.24 4.37 74.45
% increase 51% 17% 10% 28% 24%
EBITDA Latest FY 23.23 35.97 80.34 7.17 15.25
5-yrs ago 3.93 17.93 60.66 2.47 3.66
% increase 56% 19% 7% 31% 43%
Net Income Latest FY 15.92 12.66 59.53 558.93 3.03
5-yrs ago 1.49 12.21 39.51 112.4 0.274
% increase 81% 1% 11% 49% 82%
EPS-Diluted Latest FY 5.39 18 11.91 1.25 6.15
5-yrs ago 0.6 17.97 6.45 0.26 0.59
% increase 73% 0% 17% 48% 80%

As can be seen from the table above,

  • Facebook has been the outperformer in terms of sales and EBITDA over the past five years followed by Netflix and Amazon grabbing the next two positions.
  • In terms of Net income and EPS-Diluted, Amazon leads the FAANG followed by Facebook, Netflix, Apple, and Google

Facebook: Although Facebook performance for FY17 had been up to the mark, it is expected that this year earnings might prove to be a nightmare for the company. This is also reflected in the second quarter earnings which were too below the market estimates. This will impact the overall FY18 earnings, but it will be supported by the share buyback program and the increasing advertising revenue by Instagram.

Apple: the following quarter is expected to be a Christmas gift after the success of its new smartphones - iPhone XS, XR, and XS max and smartwatch. Apple will soon be launchin an upgraded iPad mini, new iPhone SE 2, new subscription plans for streaming services, Apple TV stick, AirPod 2 and many other products in FY19. All these may have a positive impact on its market presence.

Amazon: It is expected that the FY18 earnings will be at a very high growth level with the outperforming current quarters due to the robust Alexa enabled devices sales and the opening of new style shops at the airports.

Netflix: it is anticipated that the growth numbers will be in line with the current trend because of its increasing subscription and the deal with Viacom of making make more films and TV shows for the company.

Google: For Google, this year might not be a good year after not getting a positive response from its new Pixel 3, and the shutdown of Google+ affecting 52.5 million users might create headwinds in the near future.

Technical Analysis:

Over the past one year, the FAANG index (NYSE: NYFANG) has grown by 8.03% with Netflix and Amazon being the most significant contributor in the growth surging by 32.7% and 33.8% respectively during the year. Apple has fallen by 3.9%; Facebook has plunged by almost 20.5% during the year, and Google has fallen by 2%.

But during the past six months, NYFANG has plunged by 17.87% as all the stocks have been in the downtrend.

Over the past five trading sessions, the index is up by just 1.5% with only Facebook rising in the index by almost 3%. The index is currently trading at around US$ 2429.28 and forming a head and shoulder pattern.

With the better-anticipated results for FY18 and the head and shoulder pattern along with RSI in positive territory, all in all, it can be concluded that FAANG stocks are back in the game.


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