Investors who hold the FANG stocks (Facebook Inc (FB), Amazon.com, Inc. (AMZN), Netflix, Inc. (NFLX), Alphabet Inc (GOOGL)) may want to consider recalibrating their holdings… perhaps into GFAN, GNFA or ANFG, according to one analyst.
However, it looks like nothing will stop the FANG stocks as the sky’s the limit for all four of them.
The only one of the four in question lately has been Netflix, even it remains a darling among Wall Street analysts, despite the questions about content spend and subscriber numbers.
FANG Stocks Take a Bite Out of BAGEL
Around this time last year, some analysts were thinking that BAGEL (Alibaba Group Holding Ltd (BABA), Amazon, Google, Expedia Inc (EXPE), LinkedIn Corp (LNKD)) would replace FANG in 2016, but that didn’t happen. A lot has changed since December 2015.
LinkedIn is out of the picture, as it’s in the process of being acquired by Microsoft. Alibaba is rising in popularity still but facing questions about its accounting procedures, and Expedia has failed to turn into the hot stock some thought it would, although it has managed to climb back to around the level it was trading at a year ago.
Canaccord Genuity analyst Michael Graham noted in his Nov. 30 update on the FANG stocks have outperformed the broader market “by a wide margin” over the last two years, although they had a rather mixed third quarter.
He explained that each member of the group had a difference performance around its earnings report.
Then after Donald Trump surprised everyone by winning the presidency, there was a broad sell-off of all the FANG stocks and the tech sector as a whole, although that was short-lived. Cantor Fitzgerald recently did a study of how Trump’s presidency might affect the constituents of FANG, and one of the key risks he found for all of them was an overhaul to net neutrality rules. He named Trump’s protectionist views as a far smaller risk for the FANG names than for other tech plays such as Apple Inc. (AAPL), which relies heavily on China.
Graham still expects the group to perform well throughout 2017, although he suggests fine-tuning exposure to the individual stocks based on time horizons.
Indeed, here’s how FANG stocks could benefit from strong tech sector…