FAANG stocks have shown remarkable resilience against the brutal coronavirus-led economic downturn this year. The growing optimism surrounding gradual economic recovery strengthens the prospects for FAANG stocks.
The group has benefited from strong demand for e-commerce services and increased media consumption as people are mostly confined to their homes due to lockdowns, shelter-in-place guidelines and social-distancing measures. Moreover, the work from home and online-learning wave has driven demand for cloud computing services.
Further, the FAANG group has been instrumental in fighting the spread of coronavirus. Contract tracing tools developed by Apple and Google helped in somewhat flattening the curve. Facebook helped people keep in touch during the pandemic. Voice and video calling more than doubled on Messenger and WhatsApp.
Amazon (AMZN - Free Report) is currently the best-performing stock among FAANGs, trailed by Apple. Returns from Netflix, Facebook and Alphabet have also outperformed the S&P 500, which is up 3.3% on a year-to-date basis.
5 Stocks Outperforming FAANG
Although the FAANG’s performance has been impressive, there are a few stocks that have outperformed the group on a year-to-date basis. Here we narrow down to five such stocks.
Much similar to FAANGs, these companies have shown resiliency during the pandemic. With the gradual reopening of the economy and strong demand for e-commerce services, remote-working tech, cloud computing and cybersecurity solutions, these stocks are well-poised to generate solid returns.
Moreover, these stocks have a favorable combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Per the Zacks’ proprietary methodology, stocks with this favorable combination offer good investment opportunities.
Zoom Video Communications (ZM - Free Report) is riding on the coronavirus-induced work from home and online-learning trend. Easy to deploy, use, manage and solid scalability make Zoom Video’s software massively popular among customers. Moreover, the company’s expanding international presence is a key catalyst. Its efforts to eliminate the security and privacy loopholes as well as new hardware and Zoom From Home solution’s launch are expected to help in expanding clientele.
Zoom Video currently flaunts a Zacks Rank of 1 and a Growth Score of A. The Zacks Consensus Estimate for its fiscal 2021 earnings is pegged at $2.26 per share, having moved 78% north in the past 30 days.
RH (RH - Free Report) has been exhibiting strong profitability, buoyed by its focus on improving profit margins. This Zacks Rank #1 company has been successful in creating a new and differentiating shopping experience with the addition of hospitality (restaurants and cafes) in new galleries. Focus on elevating the brand and architecting an integrated operating platform have aided RH in becoming one of the few retailers with expanding margins, rising operating earnings, while driving significantly higher returns on invested capital.
RH has a Growth Score of A. The Zacks Consensus Estimate for its fiscal 2021 earnings is pegged at $16.56 per share, having been revised 44.9% upward in the past 30 days, indicating 42% year-over-year growth.
JD.com (JD - Free Report) is benefiting from robust adoption of e-commerce services in China. The company active customer base expanded 29.9% to 417.4 million in the 12 months ended Jun 30, 2020. Moreover, mobile daily active user count in June 2020 increased 40% year over year. This Zacks Rank #1 company has a Growth Score of A.
The consensus mark for JD.com’s 2020 earnings stands at $1.50 per share, having been raised 0.7% over the past 30 days. The earnings estimate figure suggests growth of 45.2% year over year.
Lakeland Industries (LAKE - Free Report) benefits from solid PPE demand driven by the coronavirus outbreak. The company’s expanding clientele is expected to drive the top line in the near term. Moreover, improving production efficiency and a debt-less balance sheet have been acting as tailwinds for this Zacks Rank #1 company.
Lakeland has a Growth Score of B. The consensus mark for its fiscal 2021 earnings is pegged at $3.29 per share, having been revised 41.2% upward in the past 30 days, indicating 631.1% year-over-year growth.
Wayfair (W - Free Report) is benefiting from strength in the direct retail business. Further, an expanding active customer base is contributing well to the top line.
Moreover, this Zacks Rank #2 company with a Growth Score of A is aggressively investing in international regions in order to bolster presence and expand in-house-brand offerings. Wayfair remains confident about solid prospects in the overseas markets, namely the U.K. and Germany.
The consensus mark for its 2020 bottom line is pegged at $2.34 per share, up 54% in the past 30 days. Markedly, the company reported loss of $8.03 per share in the prior-year period.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.
The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.
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