FANG, an acronym created and popularized by CNBC‘s Jim Cramer, is an investors’ darling this year. These stocks — (Facebook (FB - Free Report) , Amazon.com (AMZN - Free Report) , Netflix (NFLX - Free Report) and Alphabet L) — have returned more than 20%. The emergence of cutting-edge technology is acting as key catalysts.
Additionally, a combination of factors like improving global fundamentals, strong corporate earnings, a rising interest rate scenario, and Trump’s proposed corporate tax reform have added to the strength (read: Everything You Need to Know About FANG Stock Investing).
Let’s take a look at the fundamentals of each of these four stocks:
Facebook has a Zacks Rank #2 (Buy) and a top Growth and Momentum Style Score of A each. It belongs to the solid Industry Rank in the top 31% and saw solid earnings estimate revision of 46 cents over the past 90 days for this year with an expected earnings growth rate of 26.54%. Additionally, the social media giant is expected to post solid earnings growth of 19.46%. Its revenues are also rising with Q3 and full-year growth projected at 40.90% and 42.26%, respectively. Given its solid fundamentals, shares of Facebook have surged 48.8% so far this year and the bull trend is likely to continue in the quarters ahead.
Amazon carries a Zacks Rank #5 (Strong Sell) with a dismal Industry Rank in the bottom 13%but has a top Growth and Momentum Style Score of A each. It has gained 30.8% in the year-to-date time frame but could see some rough trading in the next few quarters given negative earnings revision activity. The e-commerce giant saw negative earnings estimate revision of $3.38 for this year over the past 90 days. Its earnings are expected to plummet 103.57% for Q3 and 29.08% for the year. However, revenues are expected to increase 28.29% in Q3 and 28.34% this year.
Netflix (NFLX - Free Report) has popped up 57% in the year-to-date time frame and the trend is likely to continue in the next few quarters given positive earnings trend and solid fundamentals. This is especially true as the world's largest video streaming company saw positive earnings estimate revision of 15 cents for this year in the past three months. Its earnings are projected to grow a whopping 165.2% for Q3 and 177.2% for this year. Revenues are also expected to grow 29.86% and 30.55%, respectively. The stock has a Zacks Rank #2 with a dismal VGM Style Score of F and an ugly Industry Rank in the bottom 42% (see: all the Technology ETFs here).
Alphabet has gained 24.3% so far this year, the least price appreciation in the FANG group. It saw negative earnings estimate revision of $3.32 for this year in the past 90 days with an expected earnings decline of 9.89%. Earnings for Q3 are also set to drop 7.28%. However, revenues are likely to explode 20.17% in Q3 and 19.96% this year. The stock has a Zacks Rank #3 (Hold) and a top Momentum Style Score of A. The online advertisement giant belongs to the solid Industry Rank in the top 31%.
How to Play?
Though earnings growth might disappoint for Alphabet and Amazon, revenues for all the FANG stocks are poised for strong growth in Q3 and the full year. Investors may want to tap this opportunity and invest in these hot stocks with the following ETFs.
First Trust Dow Jones Internet Index (FDN - Free Report)
This fund targets the Internet segment of the broad technology space with AUM of $4.9 billion and average daily volume of around 328,000 shares. It follows the Dow Jones Internet Composite Index and holds 42 stocks in its basket with 26.3% allocation going to FANG stocks. Expense ratio comes in at 0.54%. The product has surged 31.3% in the year-to-date time frame and has a Zacks ETF Rank #2 with a High risk outlook (read: Top-Ranked ETFs That More Than Doubled the S&P 500 This Year).
PowerShares Nasdaq Internet Portfolio (PNQI - Free Report)
This fund follows the Nasdaq Internet Index, giving investors exposure to the broad Internet industry. The fund holds about 85 stocks in its basket with AUM of $256.6 million while charging 60 bps in fees per year. It trades in a light volume of around 37,000 shares a day. FANG stocks account for nearly 8% share each. In terms of industrial exposure, Internet software and services makes up for 54.7% share in the basket, followed by Internet & direct marketing retail (38.7%). PNQI has gained 36.8% and has a Zacks ETF Rank #1 (Strong Buy).
New Tech and Media ETF (FNG - Free Report)
This is a newly and actively managed fund offering exposure similar to investments in high-performing technology and media leaders as characterized by the FANG stocks acronym. This is expected to lead to their superior long-term performance. The fund employs a quantitative process to select equities with a technical analysis overlay for entering and exiting individual positions in the portfolio. It holds 27 stocks in its basket with FANG stocks making up for 26.3% share. Since the fund is actively managed, it comes with a high expense ratio of 0.85%. FNG has amassed $20.3 million in its asset base since its debut on July 11 and trades in moderate volume of 60,000 shares a day on average (read: Is the New FANG-Themed ETF Well Timed?).
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