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Sunday, October 25, 2020 1:53:04 PM
3 FAANG Stocks to Buy Right Now
By: Motley Fool | October 25, 2020
• Despite their outperformance in 2020, these brand-name stocks remain bargains.
Investing in 2020 hasn't been easy. The uncertainty created by the coronavirus disease 2019 (COVID-19) pandemic ushered in a steep bear market decline during the first quarter, which was followed by a ferocious snap-back rally that took the S&P 500 to new highs.
Yet, while most investors and equities were suffering from volatility-induced whiplash, the FAANG stocks have been kicking butt and taking names.
On a year-to-date basis, the benchmark S&P 500 is up 6%, through Oct. 21. By comparison, Facebook, Amazon, Apple, Netflix, and Alphabet are up a respective 36%, 72%, 59%, 51%, and 19% (rounded to include both Alphabet's Class A and Class C shares). These industry leaders are running circles around the broader market while, at the same time, propelling it higher. Remember, the FAANGs make up a sizable percentage of the market cap-weighted S&P 500.
But even with their collective 2020 outperformance, not all FAANG stocks are created equally. In my view, three of the five FAANGs still stand out as particularly attractive right now.
Facebook
The first of the no-brainer buys is Facebook. Yes, it's faced its fair share of bad press in 2020, and it's seen its ad revenue hurt by COVID-19 pandemic. But there are three key reasons Facebook's needle continues to point up.
First, advertising is a cyclical business -- and last I checked, periods of economic expansion last substantially longer than periods of contraction or recession. Even though Facebook's ad growth has slowed to its lowest level since it became a public company, the long-term expansion of the U.S. and global economy favors its ad revenue continuing to grow.
Second, advertisers can't go anywhere else to reach more than 3 billion pairs of eyeballs. In the June-ended quarter, Facebook boasted 2.7 billion monthly active users, along with 3.14 billion family monthly active users, which includes owned sites like Instagram and WhatsApp. Being the go-to social media site affords Facebook top-tier ad-pricing power.
Third, it's only monetizing half of its assets. Currently, ads on Facebook and Instagram generate the bulk of the company's sales, with Facebook Messenger and WhatsApp not yet meaningfully monetized. That's four of the six most-visited social platforms in the world. The fact is, Facebook is still in the early to-middle innings of its growth phase, and that makes it worth buying.
As an added bonus, what if I told you Facebook was fundamentally cheap? Having averaged a price-to-cash-flow multiple of close to 24 over the past five years, Wall Street's consensus pegs the company at just over 11 time cash flow by 2023.
Read Full Story »»»
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By: Motley Fool | October 25, 2020
• Despite their outperformance in 2020, these brand-name stocks remain bargains.
Investing in 2020 hasn't been easy. The uncertainty created by the coronavirus disease 2019 (COVID-19) pandemic ushered in a steep bear market decline during the first quarter, which was followed by a ferocious snap-back rally that took the S&P 500 to new highs.
Yet, while most investors and equities were suffering from volatility-induced whiplash, the FAANG stocks have been kicking butt and taking names.
On a year-to-date basis, the benchmark S&P 500 is up 6%, through Oct. 21. By comparison, Facebook, Amazon, Apple, Netflix, and Alphabet are up a respective 36%, 72%, 59%, 51%, and 19% (rounded to include both Alphabet's Class A and Class C shares). These industry leaders are running circles around the broader market while, at the same time, propelling it higher. Remember, the FAANGs make up a sizable percentage of the market cap-weighted S&P 500.
But even with their collective 2020 outperformance, not all FAANG stocks are created equally. In my view, three of the five FAANGs still stand out as particularly attractive right now.
The first of the no-brainer buys is Facebook. Yes, it's faced its fair share of bad press in 2020, and it's seen its ad revenue hurt by COVID-19 pandemic. But there are three key reasons Facebook's needle continues to point up.
First, advertising is a cyclical business -- and last I checked, periods of economic expansion last substantially longer than periods of contraction or recession. Even though Facebook's ad growth has slowed to its lowest level since it became a public company, the long-term expansion of the U.S. and global economy favors its ad revenue continuing to grow.
Second, advertisers can't go anywhere else to reach more than 3 billion pairs of eyeballs. In the June-ended quarter, Facebook boasted 2.7 billion monthly active users, along with 3.14 billion family monthly active users, which includes owned sites like Instagram and WhatsApp. Being the go-to social media site affords Facebook top-tier ad-pricing power.
Third, it's only monetizing half of its assets. Currently, ads on Facebook and Instagram generate the bulk of the company's sales, with Facebook Messenger and WhatsApp not yet meaningfully monetized. That's four of the six most-visited social platforms in the world. The fact is, Facebook is still in the early to-middle innings of its growth phase, and that makes it worth buying.
As an added bonus, what if I told you Facebook was fundamentally cheap? Having averaged a price-to-cash-flow multiple of close to 24 over the past five years, Wall Street's consensus pegs the company at just over 11 time cash flow by 2023.
Read Full Story »»»
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Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Caveat emptor!
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