Out of curiosity I just Googled, “FANG Stock”. Here’s what I got: Diamondback Energy Inc. NASDAQ: FANG – Sep 6, 4:40 PM EDT. That is not what I was looking for. What I was actually in search of was more details on FANG, the acronym for Facebook Inc., Amazon.com, Inc., Netflix, Inc. and Google (which is now Alphabet Inc.). Because these are top-performing technology stocks, they get a disproportionately large amount of the headlines when it comes to stocks. And that’s for good reason, what they have created is smack-dab-in-the-middle of pop culture. All four companies are disrupters. You could say they run our tech world. Of course there are other major players that I like (i.e. Cisco, etc.). But with my brother, Milton, introducing me to “Narcos,” on Netflix, FANG has been on my mind. That doesn’t mean you should go out and mortgage the house (or short the farm), but to me it’s worthwhile to look at, if you have an interest. And I’m curious.
The companies that make up FANG are popular for good reason. But what does analytics tell us about their past performance? Are they worthwhile investments? You bet they are and have been. Google it. How about moving forward? Your guess is as good as any. But before you pull the trigger, have a plan. Most new traders worry only about when to buy a stock. Experts tell us that we should have an exit strategy as well. That is, when you’ll sell. Investopedia says, “…while buying at the right price may ultimately determine the profit gained, selling at the right price guarantees the actual profit, if any.” (http://www.investopedia.com/articles/stocks/10/when-to-sell-stocks.asp)
Most recently (June 2016), headlines like, “US Equity Markets Plunge As ‘FANG’ Stocks Give Up 2016 Gains”, dominated. But today, other analysts are saying, “investors rushing into the safe haven of FANG stocks…all-time highs for Facebook and Amazon”. And course, no one person really knows what the future holds. So if you’re interested in dipping your toes into “FANG”, do your homework. That is, do your own due diligence, study it hard and go with what you know—not exactly like buying fine art, where some say one should buy what they enjoy looking at, aside from upside economic potential. The key to due diligence, I think, is the diligence part. You have to pay attention, be thorough and careful. And that takes time, interest and wherewithal. Right now, I plan to google and study Netflix. Because it’s been a stock that has been haunting me since I did not pull the trigger on a buy when Netflix shares hit a split-adjusted $2.56 per share during the crisis. And by the way, the stock has now risen 1,670 percent since. Ouch! But today Netflix is trading at a very high multiple and doesn’t generate positive cash flow. I think Netflix is good, yet it might be the least impressive FANG stock. As of today, Facebook and Alphabet seem most remarkable. So which FANG stock? Well, there are a lot of factors to consider, but for me the lower risk seems to be Google. But then again, you get to decide which FANG stock is worthy of your hard-earned dollars. Be diligent!
Disclosure: the author holds no position in the stocks mentioned.
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