For the last few weeks, the stock markets have been in complete turmoil. There is so much going on in the bond and currency markets that equities are whipsawed. But even as the headlines are causing ruckus on Wall Street, there are still great stocks to buy.
Atop of any shopping list should be the greats known as the FANG stocks. This includes Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX) and Alphabet (NASDAQ:GOOGL,NASDAQ:GOOG). I want to also include Apple (NASDAQ:AAPL) because it is arguably the most important company in many generations — if not of all time. It is impossible to discuss the FAANG stocks without also discussing AAPL stock.
In addition to the market gyrations, the band of formidable FAANG stocks are under fire from political rhetoric. Very similar to the healthcare sector, these mega-caps and specifically the ones that deal with social media are also under fire from both sides of the political aisle.
This makes the FAANG stocks difficult stocks to buy with convictions to a lot of traders. Politicians love to beat up on them when they become successful. We saw this happen to Microsoft (NASDAQ:MSFT) decades ago. Now the attacks are against GOOGL, AMZN and FB. This even extends to the Eurozone. France for example wants to levy internet taxes against them.
From a trading perspective, the bunch moves in synchrony. So, negative headlines for GOOGL or FB translate into sympathy moves in other companies like AAPL stock.
So there are definite dips to buy — especially if the investor time frame is longer than just a few ticks. Today we discuss three of the FAANG stocks: AAPL, FB and AMZN stock.
Apple (AAPL)
First off, AAPL is the innocent bystander in this mess. They are not directly in the line of fire of the Attorney General but the Apple stock price definitely suffers as the headlines litter the ticker tapes.
Fundamentally, this is a company never gets the respect it deserves on Wall Street. It sells at a cheap 18 price-to-earnings ratio and 3.5 times sales. Moreover, they are finally making the turn to becoming a subscription model more so than a company that almost entirely depends on the iPhone unit sales.
Eventually the experts will learn to appreciate it for what it is a cash cow. Therefore owning AAPL stock for the long-term will deliver profits. And buying it here is not likely to be a mistake. In fact it is almost a definite winner barring any black swan events.
Technically, AAPL stock price could be unfolding a bullish pattern that targets $245 or higher. If so the move started with its Christmas bounce. The buying will accelerate once the AAPL bulls can close above $218/$220 zone. If I am long then I stay long, else it still would make for a good risk reward to start some now.
Facebook (FB)
The second opportunity today is to buy FB stock for the long term. This one is in direct line of AG fire. So depending on the risk appetite, I love owning Facebook stock even with all the fears now.
This is a company that absolutely dominates advertising but under the radar. Because GOOGL hogs the headlines as the gorilla with its search engines especially mobile. But FB is a behemoth in the segment and I know this from talking to people who actually use it for business advertising purposes.
Moreover, there is a lot of fear baked into the FB stock price from privacy. But experts on Wall Street don’t give enough weight to the fact that only a fraction of Facebook users are actually in the U.S. Globally, the privacy issue is minuscule. I was overseas just after the Cambridge Analytica problem surfaced, and it was not a topic of discussion anywhere I went.
So the headline problems here are overblown and the stock will continue to deliver excellent profit and loss statements with a healthy balance sheet. So long term, Facebook stock is a definite buy-and-hold.
Amazon (AMZN)
The third idea today is to go long AMZN stock with conviction. It has recently been lagging the others so it has a catch-up trade brewing. This is a momentum stock so it runs fast.
Amazon is the absolute monster of all startups. It never stopped being one. Under the leadership of Jeff Bezos, AMZN stock soared in spite of all the criticism that plagued it for decades. Against all expert opinions, they managed to overspend and deploy their funds with great acumen.
As a result they now dominate the web with AWS. And I can almost guarantee that they will dominate another vertical that we don’t even know about yet.
The bottom line is that this is a proven management team that keeps finding new ways to make money and critics have been silenced. Yes, they spend a lot but they also grow a lot. That’s the goal for all growth companies. This is the perfect example of what they should all do. Owning AMZN stock for the long-term is a winning idea almost always.
In short, FAANG stocks are excellent companies with very healthy stock charts. Their managements teams are above par and they keep delivering strong earnings reports, yet the naysayers never quit. Critics are very fast at pointing out pitfalls where there aren’t many. They most often fail to see the bigger picture long-term.
Shorting healthy companies like this when we have full employment and central banks that are committed to inflating the globe is insane. The easier path for FB, AAPL, and AMZN is up so these are stocks to buy.
There is so much to cover with FANG stocks that I did a short video to explain that there is an imminent move coming and how.
We are still in headline mode because of geopolitical headlines. Moreover, we have a set event coming this Friday when Fed chair Jerome Powell testifies. So I don’t take full positions all at once. It is a good idea to enter in tranches so they leave room for risk management down the line if and when needed.
Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. Join his live chat room for free here.
