Facebook, Apple or Amazon: Time to Buy a Few FAANG Stocks Again?

August has been a crazy month for the markets, as the tit-for-tat U.S.-China trade war rages on, with Trump’s tweets leading to increased volatility. The S&P 500 has now fallen roughly 5% over the last month to help pull it down nearly 3% over the last 52 weeks. And five tech titans that once helped drive much of the decadelong bull run, the so-called FAANG stocks, have seen their shares fall as well.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Market Overview ” data-reactid=”12″>Market Overview

Facebook FB, Amazon AMZN, Apple AAPL, Netflix NFLX, and Google parent Alphabet Inc. GOOGL make up the group of five technology stocks that came to be known as FAANG. These five firms account for nearly 20% of the S&P 500’s value and contributed more than their fair share to the S&P 500’s climb. But their outsized impact has also hurt the index over the last year, with Facebook the only FAANG component in the green over the last 52 weeks, up 3.3%.

Investors will see that NFLX stock put in the worst performance in the past year, with Amazon a distance second. Much of this downturn was due to the massive second-half/Q4 2018 selloff. In fact, all five stocks are up in 2019, with Facebook and Apple up over 30%. Meanwhile, Amazon has climbed 17%, with GOOGL and NFLX up, 12% and 9%, respectively—the S&P is up roughly 13%.

There are clearly many macroeconomic factors to consider at the moment, including increased global and U.S. recession worries, falling bond yields, and the trade war between the world’s two largest economies. Still, the question is should investors consider buying some FAANG stocks now?

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<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Right off the bat, the only FAANG stock currently holding a Zacks Rank above a #3 (Hold) is Alphabet. GOOGL is a #2 (Buy) that has tried to slowly expand beyond its search engine business. Nonetheless, Google is still completely reliant on ads. Luckily Google is the largest digital advertising company in the U.S. and is expected to capture roughly 38% market share in 2019, against second-place Facebook’s 22%. Plus, Alphabet’s revenue jumped 19% last quarter and management authorized its largest ever buyback program at $25 billion.” data-reactid=”28″>Right off the bat, the only FAANG stock currently holding a Zacks Rank above a #3 (Hold) is Alphabet. GOOGL is a #2 (Buy) that has tried to slowly expand beyond its search engine business. Nonetheless, Google is still completely reliant on ads. Luckily Google is the largest digital advertising company in the U.S. and is expected to capture roughly 38% market share in 2019, against second-place Facebook’s 22%. Plus, Alphabet’s revenue jumped 19% last quarter and management authorized its largest ever buyback program at $25 billion.

Looking ahead, our Zacks Consensus estimates call for Alphabet’s full-year revenue to jump 20.3% to lift its adjusted earnings by 13.6%. These impressive growth figures are expected to come in at nearly the same clip next year. GOOGL stock is also currently trading at 21.3X forward 12-month Zacks earnings estimates, which marks a discount compared to its industry’s 27.4X average and its own three-year median of 25.1X.

Google also ended its most recent quarter with over $121 billion in cash on hand. However, the firm doesn’t pay a dividend because it feels its growth is still a more valuable way to return value to shareholders. GOOGL stock also currently rests nearly 10% below its 52-week highs and is one of those stable stocks that might be worth grabbing in our uncertain market.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Netflix ” data-reactid=”31″>Netflix

Moving on, Netflix is currently a #3 (Hold) that holds “F” grades for Value, Growth, and Momentum in our Style Scores system. NFLX stock is also FAANG’s worst performer not only in 2019 but also over the past 12 months, down over 20%. This could give Netflix stock room to run, but Wall Street seems to only care about the streaming TV giant’s subscriber figures. Therefore, investors should likely stay away from NFLX unless it posts stellar Q3 user growth and guidance, especially with Disney DIS and Apple set to enter the streaming market.  

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