FAANG stocks

 

To many investors, FAANG stocks define the market. To me, as a conservative investor, it is not. For market-cap ETFs such as SPY, FAANG has more weight than other stocks. As a group, FAANG has been very profitable for the last year. To me they seem to be risky today. The following tables summarize these stocks, and I’ll check them again in a year and/or after September (usually the worst month) to confirm my findings. It is also a case of momentum vs. value.

 

All the info is available free on websites such as Finviz.com. All data is from 8/5/2017. These are for info only and I’m not liable for any errors. Returns are annualized and dividends are not included.

 

Stocks	Current Price 8/5/17	From 8/5/16 to 8/7/17	From 8/7/17 to 8/7/18	From 8/7/18 to 10/7/18	From 01/03/22 to 1/03/23
FB (Meta)	169.62	37%	7%	-84%	-63%
AMZN	173.85	29%	88%	2%	-50%
AAPL	156.39	48%	30%	48%	-31%
NFLX	180.27	48%	94%	-4%	-51%
GOOGL	945.79	17%	33%	-47%	-39%
Avg.1	247.41	44%	50%	-17%	-47%
Beat SPY by		214%2	233%	-440%	-130%
SPY		14%	15%	5%	-20%

 

¹ All averages in this article are estimates. Fees and dividends are not included.

² Beat = (44% - 14%) /14=214%. Similar to other calculations for “Beat”.

 

From the above and assuming using the recommended trailing stops, you should have exited your positions of FAANG before 2022 and saved the loss of about 50% in 2022.

 

Fundamentals as of 8/5/2017 (recommend to do the same analysis whether they good buys now.

 

Stocks	P/E	P/E FWD	P/S	P/B	Debt/ Eq.	Sales Q/Q	EPS Q/Q	ROE
FB	37	26	15	7	0.00	45	69	23
AMZN	16	14	6	4	1.11	2	18	27
AAPL	18	15	4	6	0.73	5	10	35
NFLX	221	90	8	25	1.55	32	58	13
GOOGL	34	24	7	4	0.03	21	-28	14
Avg.	65	34	8	9	0.68	21	25	22
Beat SPY 1	164%		277%	186%
SPY2	25		2	3

 

¹ Very rough estimates.

² Most fundamental metrics are from other sources than Finviz.com, so there may be small discrepancies.

 

Technical as of 8/5/2017

 

Stocks	SMA50%	SMA200%	RSI(14)	52-week height	Short%	Insider Trans.
FB	8%	23%	67	-3%	1%	-86%
AMZN1	35%	8%	51	-6%	1%	0%
AAPL	5%	17%	63	-2%	1%	-31%
NFLX	10%	26%	59	-6%	6%	-69%
GOOGL2	-2%	8%	41	-6%	0%	0%
Avg.	11%	16%	56	-5%	2%	-37%
Beat 3  SPY by	1020%	173%	-9%

 

¹ Recent double top. Bearish.

² Multiple tops.

³ Very rough estimates.

The two SMA (Simple Moving Averages) technical metrics are positive.

 

Summary

As a group, FAANG is fundamentally unsound but technically sound compared to SPY. I said the same about the market.  As suggested, use trailing stops if you own any of these stocks. When they turn to be technically unsound, this is the time to exit. They could stay in the current valuations for a long time. However, when the institutional investors are dumping them, they will fall very fast and steep. SMA-20% would be a good indicator for an exit. NFLX is the most fundamentally unsound stock.

 

The rosy pictures of these stocks have been priced in. I recommend that you sell the stocks with a P/E over 35 unless you have a good reason not to. It is insurance to protect your profits. Even if they still rocket higher, you still will have a good sleep. When any bad news occurs, they may rocket back to earth. Newton’s Law of Gravity? If you are one of the lucky owners of these stocks, use trailing stops (i.e., stops from the current prices instead of your buy prices) to protect your profits. As 1/2020, most of these stocks are still not fundamentally sound but technically sound.