What FAANG Stocks Are Good Buys This Year?
What stocks performed the best?
This time last year, January 2018, the top stock picks were in fact the FAANG stocks. Facebook, Amazon, Apple, Netflix and Google (Alphabet) were strong gainers and had lots of upside potential. The reasoning behind analysts giving FAANG stocks a strong 2018 outlook was largely based on the gains that they had made in 2017. In the 2017 fiscal year, 4/5 of the FAANG stocks make gains of around 50%. Alphabet stock was the only one that did not gain 50% in 2017, although it still ended the year strong with gains of 30%. Facebook stock was booming and was at its highest point since 2013 and Apple stock was also at its highest since 2010.
A Look At FAANG Stocks Last Year
Clearly 2018 did not go as well as 2017 for the FAANG’s, due to economic challenges that could not be forecasted. Regulation and scandal also caused mass selloffs for these tech stocks, although Facebook was hit the worst after a series of cyber-security flaws made headlines. Trade-war negotiations between China and the US caused uncertainty in the markets and gave investors entry points into even the most highly priced U.S equities.
We look at what FAANG stocks offer coming into the new year.
Facebook Stock (NASDAQ: FB)
Arguably the worst performing FAANG stock of 2018 was Facebook. FB stock ended 2018 down 25 percent, meaning that it ended the year deep into a bear market. This means that 2018 was Facebook’s worst year in terms of stock market performance since it went public in 2012, last year was the first year that FB stock ended down.
The cause of FB’s lackluster performance was attributed to cyber-security challenges which dragged down user levels. This caused investors to sell and slash the company’s market value. Not to mention, Facebook’s top executives were put under fierce scrutiny and even had to answer to Congress.
Moving into 2019, Facebook stock remains risky as the company still faces serious challenges relating to user metrics.
Amazon Stock (NASDAQ: AMZN)
On a more positive note, Amazon ended 2018 making gains of over 28 percent.
What did Amazon do right last year? Amazon ventured into new territories last year, making its mark on the health care industry and even stepping into the media landscape. Amazon also launched its own physical stores across the U.S and also announced that it would be building three new corporate office locations outside of Seattle.
In Q4, Amazon stock took a tumble due to weak guidance for the holiday period. Rising interest rates also had an affect on the market, which made up for some of Amazon’s declines. Amazon stock had a strong summer, with it ending the year down over 20 percent since September.
This year Amazon will face similar regulatory pressures that Facebook is facing. President Donald Trump has called for antitrust reviews of Amazon, if serious action is taken we could see selloffs.
Apple Stock (NASDAQ: AAPL)
Apple ended 2018 down nearly 7 percent, making last year AAPL’s worst year since the 2008 financial crisis. 2018 had its highs and lows for Apple, with the tech giant being the first company to reach a valuation of $1 trillion. It has since fell well below that market cap.
The causes behind Apple’s declines ranged from weak iPhone XR demand to changes in the way that Apple reports its unit sales. Although, Apple managed to navigate its way around regulatory challenges and public scandals that most other FAANG stocks faced.
This year, Apple is also subject to volatility as demand for new iPhone models is still uncertain.
Netflix Stock (NASDAQ: NFLX)
Netflix made its shareholders very happy in 2018, as it was the best performing FAANG stock over the course of the year. NFLX ended 2018 up nearly 40 percent.
By releasing more original content to its platform, Netflix was able to keep its competitors at bay. It’s partnerships with other studios ensured that subscribers were entertained year-round, which helped the company post strong user metrics.
The only problem that investors see with Netflix is its extensive content spending and new competition from Disney.
Google Stock (Alphabet) (NASDAQ: GOOGL)
Alphabet finished the year only 1 percent down, which was better than most of the other FAANG stocks.
Much like Facebook, Alphabet also faced regulatory challenges (not as severely as Facebook) and also had to speak about its business practices in-front of Congress.
Despite its relatively flat stock market price, Alphabet has posted strong ad revenue metrics across the year along with growth in its other businesses. Waymo, Alphabet’s self-driving car company also made notable gains.
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