3 FAANG shares that score a “perfect 10”
In the first week of September, the markets suddenly fell from their peaks. This decline was most pronounced in the NASDAQ index, which fell from 1,200 points – around 10% – in just 5 trading sessions. However, the situation has stabilized since then. Stocks have been up and down, but the NASDAQ has been generally stable at or near 11,000 for the past three weeks. The hold pattern is probably more important than the decline. It took longer and seems like a classic market correction. The 5-month run of the NASDAQ up to its all-time high of September 2nd has overrated it a bit and has now fallen back to a more sustainable level. This is confirmed by a look at three main components of the index that are members of Tech's FAANG club. The FAANG stocks are Facebook, Amazon, Apple, Netflix and Google (Alphabet). They are the 800-pound gorillas of the technology world, companies of enormous size and reach whose operations and market volatility have been a major driver of NASDAQ and the entire stock market in recent years. And three of them have another important point in common: Each of them receives a “Perfect 10” rating from the TipRanks Smart Score. The Smart Score rates each stock based on 8 factors that have historically correlated with future outperformance and combines them into a simple scale of 1 to 10 to indicate the likely future price of the stock. Now let's see why these tech giants did so well, and what Wall Street analysts have to say about them. Facebook (FB) First on our list is Facebook. The social media giant has generated both an industry and a lot of controversy in the years since its outbreak. In recent years, Facebook has come under fire for advertising policies, privacy violations, and allegations of censorship – but none of that has stopped the stock's long-term growth. The company makes its money selling advertising by using AI tracking algorithms to monitor account activity and create perfectly targeted ads. With this system we got to know impressions, banner advertising and pay-per-click in less than a generation. It has changed the way we do business online. With the upcoming elections, Facebook is not afraid of controversial actions. The company announced that it would ban political ads and censorship groups promoting violence or spreading false information about the corona pandemic in the week leading up to election day. These measures, which are supposed to be politically neutral, have provoked criticism from the political arena. However, that hasn't stopped Facebook from making money. Earnings declined sequentially by 33% in the first quarter of this year – but that should be put into perspective. FB's pattern is to have its best results in the fourth quarter (vacation advertising) and its lowest results in the first quarter. Against this background, it is more important that Facebook's EPS in the first quarter in the “Corona quarter” rose by 101% compared to the previous year. Second quarter results were almost as impressive, with earnings per share of $ 1.80 up 97% year-to-date. Rosenblatt Securities 5-star analyst Mark Zgutowicz sees many reasons for optimism about Facebook's near-term outlook. Zgutowicz admits that consumers may develop "spending fatigue" with the anti-COVID stimulus bills. "Given Facebook's immense e-commerce engagement, with 9 million active small business advertisers now and the approaching Christmas season," the analyst believes. The exhaustion of stimulus spending will be offset (by) an escalation in the e-commerce process. “Consistent with these comments, Zgutowicz rates FB a Buy and sets a price target of USD 325. That target implies room for the stock to appreciate 24% over the next year. (To see Zgutowicz's track record, click here.) Overall, the consensus rating for strong buy on Facebook is based on 38 recent ratings with a breakdown of 33 buy, 4 hold, 1 lone sell. The shares have a price of $ 261.90 and an average target price of $ 295.82, indicating an upward movement of 13% from current levels. (See FB stock analysis on TipRanks) Amazon.com (AMZN) Next, Amazon is the second largest publicly traded company in the market with a market cap of $ 1.59 trillion and a notoriously high share price of over $ 3,000. Amazon has proven itself to be a master of self-invention since the late 1990s. It started out as an online bookseller and survived the doc.com bubble. Today it is the world's largest online retailer, where customers can buy everything from buttons to brie. and even books. Given the performance of Amazon, the steady rise in stock value over the years is the most immediate salient factor. Under the leadership of Jeff Bezos, Amazon does not pay dividends or conduct share buybacks. Investors only benefit from the appreciation of their shares. And that appreciation was particularly significant for long-term investors. Only in the past five years has the stock grown by over 480%. The company has achieved this growth by seizing every opportunity that presents itself – if it doesn't invent it. The corona crisis was no exception to this pattern; With social lockdown policies keeping people at home and shops and stores closing, Amazon's service became indispensable. Customers can order anything and have it delivered. The company's sales in the second quarter of 20 reflect this success. At $ 88.9 billion, they were up 40% year over year. The result also showed how Amazon thrived under the new conditions. The results of the first quarter were in line with the previous six quarters. However, in the second quarter, earnings per share soared to $ 10.30, well ahead of the $ 1.74 estimate. In his coverage of Amazon stocks, JMP 5-star analyst Ronald Josey notes that the company is a perfect fit and the time. “The COVID-19 pandemic has driven e-commerce adoption significantly by at least three years, in our view, and Amazon's investment in the product selection and delivery network, which continues to improve, has been shown this quarter. From mid-April onwards, demand surged beyond the essentials to a normalized mix of hardlines and softlines, and newer services such as food delivery tripled. Overall, we believe that the execution of 2Q and the ability to bring newer products and services to market underscore Amazon's strength as a company, ”said Josey. Josey rates Amazon as an outperform (i.e. Buy), and its price target at an eye-opening $ 4,075 suggests 29% growth for the next 12 months. (To see Josey's track record, click here.) Overall, unsurprisingly, the consensus rating for strong buying on Amazon is unanimous, based on no fewer than 37 positive reviews. The share price is $ 3,149, and the average target price of $ 3,732 implies an upside of 18.5% for a year. (See AMZN stock analysis on TipRanks) Apple, Inc. (AAPL) And now we come to Apple, the largest single component of NASDAQ, which makes up over 13% by weight of the index. It is also the largest publicly traded company in the world. Two years ago, in the summer of 2018, Apple became the first company to reach a market capitalization of more than $ 1 trillion, and earlier this year Apple topped more than $ 2 trillion. The company is currently valued at $ 1.98 trillion. A huge benefit for Apple when the Corona crisis hit was that the company had entered 2020 after the record fourth quarter results. Apple's Q4s tend to be the company's best, powered by Christmas sales. The fourth quarter of 19 gave Apple a financial kick just before the revenue crunch hit in the first quarter of 20. Through Q2 20, Apple's earnings per share were just 64 cents, well below its forecast of $ 2.03. However, revenue remained at $ 60 billion, roughly in line with Apple's historic mid-year quarterly performance. Looking ahead, Apple has at least two other important advantages going forward. First, the company will release its 5G-compatible iPhone 12 line in the fall. Second, at least a third of Apple's installed iPhone users will enter the natural device replacement cycle over the next year. JPMorgan analyst Samik Chatterjee reviewed Apple and sums it all up in clear prose: “… Investors have largely recognized the rich valuation of AAPL stocks. While the $ 2 billion market cap valuation is a significant milestone in itself, the fact that AAPL stock topped it in a year of significant COVID-19 disruption shows that not just their services, but theirs as well Products are recurring, so investors are now willing to pay a service-like premium for the entire revenue stream and a modest premium based on the expectation of further sales / revenue increases. While we recognize that valuation is no longer an easy entry point into the stock, at the same time, potential positive sales / earnings drivers and impending catalysts will make it difficult for investors to move away from the stock. "To that end, Chatterjee is pricing AAPL stock at $ 150, up 29% and supporting its overweight (i.e. buy) rating. (To see Chatterjee's track record, click here.) Overall, Apple has a moderate buy rating from analyst consensus with 35 ratings split across 24 buys, 8 holds and 3 sells, the stock is selling for $ 115.81 with an average price target of $ 122.04, suggesting a modest move up from 5.5% from current levels (see Apple stock analysis under TipRanks) To find good ideas for trading technology stocks at attractive valuations, visit TipRanks' Best Stocks to Buy, a newly introduced tool that does all Insights into the stocks of TipRanks. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended for informative purposes only be used for ion purposes. It is very important that you do your own analysis before making any investment.