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These 5 Stocks Could Generate Better Returns than FAAMG in 2021
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The year 2020, so far, has been a fabulous one for the FAAMG stocks, which represents the five big top-performing technology companies — Facebook, Amazon (AMZN - Free Report) , Apple (AAPL - Free Report) , Microsoft, and Alphabet’s Google. Collectively, FAAMG represents 20.5% of the S&P 500 index’s weight.
The new acronym coined by Goldman Sachs is a modification over FAANG, wherein Netflix (NFLX - Free Report) has been replaced with Microsoft due to its comparatively smaller market capitalization. FAAMG can be interchangeably used with GAFAM.
With a year-to-date (YTD) gain of 81.2%, Apple is currently the best-performing stock among FAAMGs, trailed by Amazon’s 73.5%. Microsoft, Facebook and Alphabet rallied 43.5%, 30.1%, and 28.4%, respectively, also outperforming the S&P 500, which has been up 18.8%, year to date.
The group has benefited from heightened demand for e-commerce services and increased media consumption as people are mostly confined to their homes due to the lockdowns, shelter-in-place guidelines and social-distancing measures amid the coronavirus pandemic. As vaccination programs will take several months to reach a major portion of the global population, these factors are likely to continue to benefit the FAAMG group in 2021 as well.
Nonetheless, there are several stocks which have outperformed the FAAMG stocks in the year so far and are expected to carry the momentum further next year as well.
5 Better Bets Than FAAMG for 2021
Here we pick five fundamentally-strong stocks that are poised to offer good investment opportunities compared with FAAMG in 2021.
Tesla (TSLA - Free Report) makes it to the top of our list, as electric vehicle (EV) sales are anticipated to improve in the New Year on an improved economy and comparatively lower interest rates. However, it’s just not next year, EV sales will, in fact, likely reach 26.95 million units by 2030 from the 3.27 million units sold in 2019, marking a CAGR of 21.1%, according to a MarketsAndMarkets report.
Moreover, according to a study by the Boston Consulting Group, EVs are expected to account for a third of the global auto market by 2025, and more than 50% by 2030, easily surpassing the sales of internal combustion engines (ICEs) powered vehicles.
Tesla is poised to benefit from the robust EV outlook. The company has a first-mover advantage in the e-mobility space, with high range vehicles, superior technology, and software edge. With the Model 3 sedan being its flagship vehicle, the automaker has established itself as a leader in the EV segment. Ramp-up of the Model Y production is further boosting its top-line growth. Also, solid production levels from the Shanghai Gigafactory bode well for its future growth.
Along with increasing automotive revenues, the firm’s energy generation and storage revenues are also boosting Tesla’s prospects. Notably, both solar and storage deployments are likely to witness significant growth in the days to come on positive reception of the Megapack and Powerwall products. A brilliant line-up of upcoming products and aggressive expansion efforts bode well for Tesla.
The EV maker had already seen its shares jump a whopping 665.3% in the year-to-date period, easily outpacing the Zacks Auto Manufacturers – Domestic industry’s rally of 243.9%. What’s more, Tesla’s projected earnings growth for the next year is still a healthy 58.9%. The Zacks Consensus Estimate for 2021 earnings also moved up 2% over the past 30 days to $3.56 per share. Tesla currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Trade Desk’s (TTD - Free Report) shares have been up a whopping 273.8% YTD, outperforming the Zacks Internet Services industry’s gain of 34.1%. The digital advertising company is benefiting from the momentum in programmatic ad buying. In addition, the emergence of digital content boosted the usage of this company’s inventory across all forms of ConnectedTV (“CTV”). Moreover, recovering ad demand and spending scenario is anticipated to fuel the top line.
Markedly, digital ad spending surpassed traditional media buying last year. Additionally, citing reports of eMarketer, WNIP revealed that the digital ad market is estimated to reach $225 billion by 2024 in the United States alone, up from this year’s nearly $150 billion. This gives The Trade Desk plenty of room to expand, and marketers need to reach consumers beyond Google and Facebook.
The Trade Desk currently flaunts a Zacks Rank of 1. The Zacks Consensus Estimate for 2020 earnings is pegged at $4.44 per share, having been revised 5% upward in 30 days’ time. For 2021, the consensus mark for earnings has moved 2% north to $4.58 per share over the same time frame.
NVIDIA Corporation (NVDA - Free Report) is gaining from the pandemic-induced work-from-home and learn-at-home wave. The graphic chip maker has witnessed solid demand for GeForce desktop and notebook GPUs, which is driving gaming revenues. Furthermore, a surge in Hyperscale demand is a tailwind for the company’s Data Center business.
Additionally, the Arm acquisition is expected to aid NVIDIA in offering end-to-end ecosystem of technology across the data center, IoT, autonomous vehicles and mobile domains. The company is now well poised to upscale its inference technology, drivers, and accelerators by utilizing Arm’s robust architecture and chip designs.
The NVIDIA stock has spiked 126.1% in the year-to-date period, outperforming the Semiconductor – General industry’s gain of 34.8%. The Zacks Consensus Estimate for fiscal 2022 earnings has been revised upward by 5 cents in the past 30 days to $9.71 per share. The figure indicates growth of 18.7% on a year-over-year basis.
Zscaler (ZS - Free Report) is riding on the heightening demand for cyber-security solutions owing to the slew of data breaches. Increasing demand for privileged access security on digital transformation and cloud-migration strategies is a key growth driver.
Apart from this, the company’s Edge cloud for policy enforcement, multi-tenancy, proxy for SSL or TLS inspection and zero trust network access are positioned robustly to gain adoption amid the thriving remote-work culture.
The Zacks Rank #2 company’s portfolio strength boosts its competitive edge and helps add users. Furthermore, a strong presence across verticals, such as banking, insurance, healthcare, public sector, pharmaceuticals, telecommunications services and education, is another key catalyst.
The Zacks Consensus Estimate for fiscal 2021 earnings is pegged at 37 cents per share, having been revised 27.6% upward in 30 days’ time. For fiscal 2022, the consensus mark for earnings has moved 9.6% north to 52 cents per share over the same time frame. Shares of Zscaler have soared 344.7%, outperforming the Zacks Internet Services industry’s return of 34.2% in the year so far.
Wayfair (W - Free Report) shares have appreciated 215.2% on a year-to-date basis, outperforming the Electronic Commerce industry’s gain of 64.3%.
The strengthening direct retail business across the United States and international regions has been driving this Zacks Rank #2 company’s growth. Additionally, an expanding active customer base has been a tailwind as well. Furthermore, the company is aggressively investing in international regions in order to fortify its footprint.
The Zacks Consensus Estimate for the current year’s earnings is pinned at $4.74 per share, having been revised 8.7% upward in 30 days’ time. The consensus mark for next year’s earnings has moved 4.6% north to $2.28 per share during the same time frame.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold.
Image: Shutterstock
These 5 Stocks Could Generate Better Returns than FAAMG in 2021
The year 2020, so far, has been a fabulous one for the FAAMG stocks, which represents the five big top-performing technology companies — Facebook, Amazon (AMZN - Free Report) , Apple (AAPL - Free Report) , Microsoft, and Alphabet’s Google. Collectively, FAAMG represents 20.5% of the S&P 500 index’s weight.
The new acronym coined by Goldman Sachs is a modification over FAANG, wherein Netflix (NFLX - Free Report) has been replaced with Microsoft due to its comparatively smaller market capitalization. FAAMG can be interchangeably used with GAFAM.
With a year-to-date (YTD) gain of 81.2%, Apple is currently the best-performing stock among FAAMGs, trailed by Amazon’s 73.5%. Microsoft, Facebook and Alphabet rallied 43.5%, 30.1%, and 28.4%, respectively, also outperforming the S&P 500, which has been up 18.8%, year to date.
The group has benefited from heightened demand for e-commerce services and increased media consumption as people are mostly confined to their homes due to the lockdowns, shelter-in-place guidelines and social-distancing measures amid the coronavirus pandemic. As vaccination programs will take several months to reach a major portion of the global population, these factors are likely to continue to benefit the FAAMG group in 2021 as well.
Nonetheless, there are several stocks which have outperformed the FAAMG stocks in the year so far and are expected to carry the momentum further next year as well.
5 Better Bets Than FAAMG for 2021
Here we pick five fundamentally-strong stocks that are poised to offer good investment opportunities compared with FAAMG in 2021.
Tesla (TSLA - Free Report) makes it to the top of our list, as electric vehicle (EV) sales are anticipated to improve in the New Year on an improved economy and comparatively lower interest rates. However, it’s just not next year, EV sales will, in fact, likely reach 26.95 million units by 2030 from the 3.27 million units sold in 2019, marking a CAGR of 21.1%, according to a MarketsAndMarkets report.
Moreover, according to a study by the Boston Consulting Group, EVs are expected to account for a third of the global auto market by 2025, and more than 50% by 2030, easily surpassing the sales of internal combustion engines (ICEs) powered vehicles.
Tesla is poised to benefit from the robust EV outlook. The company has a first-mover advantage in the e-mobility space, with high range vehicles, superior technology, and software edge. With the Model 3 sedan being its flagship vehicle, the automaker has established itself as a leader in the EV segment. Ramp-up of the Model Y production is further boosting its top-line growth. Also, solid production levels from the Shanghai Gigafactory bode well for its future growth.
Along with increasing automotive revenues, the firm’s energy generation and storage revenues are also boosting Tesla’s prospects. Notably, both solar and storage deployments are likely to witness significant growth in the days to come on positive reception of the Megapack and Powerwall products. A brilliant line-up of upcoming products and aggressive expansion efforts bode well for Tesla.
The EV maker had already seen its shares jump a whopping 665.3% in the year-to-date period, easily outpacing the Zacks Auto Manufacturers – Domestic industry’s rally of 243.9%. What’s more, Tesla’s projected earnings growth for the next year is still a healthy 58.9%. The Zacks Consensus Estimate for 2021 earnings also moved up 2% over the past 30 days to $3.56 per share. Tesla currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Trade Desk’s (TTD - Free Report) shares have been up a whopping 273.8% YTD, outperforming the Zacks Internet Services industry’s gain of 34.1%. The digital advertising company is benefiting from the momentum in programmatic ad buying. In addition, the emergence of digital content boosted the usage of this company’s inventory across all forms of ConnectedTV (“CTV”). Moreover, recovering ad demand and spending scenario is anticipated to fuel the top line.
Markedly, digital ad spending surpassed traditional media buying last year. Additionally, citing reports of eMarketer, WNIP revealed that the digital ad market is estimated to reach $225 billion by 2024 in the United States alone, up from this year’s nearly $150 billion. This gives The Trade Desk plenty of room to expand, and marketers need to reach consumers beyond Google and Facebook.
The Trade Desk currently flaunts a Zacks Rank of 1. The Zacks Consensus Estimate for 2020 earnings is pegged at $4.44 per share, having been revised 5% upward in 30 days’ time. For 2021, the consensus mark for earnings has moved 2% north to $4.58 per share over the same time frame.
NVIDIA Corporation (NVDA - Free Report) is gaining from the pandemic-induced work-from-home and learn-at-home wave. The graphic chip maker has witnessed solid demand for GeForce desktop and notebook GPUs, which is driving gaming revenues. Furthermore, a surge in Hyperscale demand is a tailwind for the company’s Data Center business.
Additionally, the Arm acquisition is expected to aid NVIDIA in offering end-to-end ecosystem of technology across the data center, IoT, autonomous vehicles and mobile domains. The company is now well poised to upscale its inference technology, drivers, and accelerators by utilizing Arm’s robust architecture and chip designs.
The NVIDIA stock has spiked 126.1% in the year-to-date period, outperforming the Semiconductor – General industry’s gain of 34.8%. The Zacks Consensus Estimate for fiscal 2022 earnings has been revised upward by 5 cents in the past 30 days to $9.71 per share. The figure indicates growth of 18.7% on a year-over-year basis.
Zscaler (ZS - Free Report) is riding on the heightening demand for cyber-security solutions owing to the slew of data breaches. Increasing demand for privileged access security on digital transformation and cloud-migration strategies is a key growth driver.
Apart from this, the company’s Edge cloud for policy enforcement, multi-tenancy, proxy for SSL or TLS inspection and zero trust network access are positioned robustly to gain adoption amid the thriving remote-work culture.
The Zacks Rank #2 company’s portfolio strength boosts its competitive edge and helps add users. Furthermore, a strong presence across verticals, such as banking, insurance, healthcare, public sector, pharmaceuticals, telecommunications services and education, is another key catalyst.
The Zacks Consensus Estimate for fiscal 2021 earnings is pegged at 37 cents per share, having been revised 27.6% upward in 30 days’ time. For fiscal 2022, the consensus mark for earnings has moved 9.6% north to 52 cents per share over the same time frame. Shares of Zscaler have soared 344.7%, outperforming the Zacks Internet Services industry’s return of 34.2% in the year so far.
Wayfair (W - Free Report) shares have appreciated 215.2% on a year-to-date basis, outperforming the Electronic Commerce industry’s gain of 64.3%.
The strengthening direct retail business across the United States and international regions has been driving this Zacks Rank #2 company’s growth. Additionally, an expanding active customer base has been a tailwind as well. Furthermore, the company is aggressively investing in international regions in order to fortify its footprint.
The Zacks Consensus Estimate for the current year’s earnings is pinned at $4.74 per share, having been revised 8.7% upward in 30 days’ time. The consensus mark for next year’s earnings has moved 4.6% north to $2.28 per share during the same time frame.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold.
Start Your Access to the New Zacks Top 10 Stocks >>