Welcome to Episode #191 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week she went solo to take a look at the market volatility and whether or not the FAANG stocks are on sale.
The FAANGs soared in 2017 and took a dive in late 2018, along with the rest of the market.
But most of them bounced back in the first six months of the year, along with the rest of the stock market, only to see some weakness in the summer of 2019.
Should you be buying?
Are the FAANGs Cheap?
1. Facebook (FB - Free Report) is trading with a median P/E of 22.6 in 2019 which is the lowest median for the company since its 2012 IPO. In 2012, it traded with a forward median P/E of 198x. Its current P/E is 28.2 as shares have sunk 7% in the last month. Is Facebook finally on sale?
2. Amazon (AMZN - Free Report) has a forward P/E of 73 which sounds expensive but it’s the lowest since the 2009-2010 period. That was before AWS burst on the scene. Shares are down 8.1% in the last month and 8.9% over the last year. That’s underperforming the S&P 500 which is down about 1% during that same period. Is now the time to buy?
3. Apple (AAPL - Free Report) has long been known as the “value” stock of the FAANG. Heck, even Warren Buffett bought shares in 2016 when it was trading with a median P/E of 12. Now, the forward P/E is 17.7. That’s hard dirt cheap even though investors get a dividend, yielding 1.5%. Shares have fallen 6% over the last year. Are they cheap enough for value investors to jump in?
4. Netflix (NFLX - Free Report) has the highest P/E of the FAANGs, with a forward P/E of 90. However, it used to be triple digits but the shares have fallen 13% over the last month which has brought the P/E down. This 90 P/E is also the lowest P/E for the company since 2010-2011 when the median P/E was in the 40s. Is this a buying opportunity?
5. Alphabet (GOOGL - Free Report) shares are down 6.9% in the last year while the S&P 500 has fallen only about 1%. It has a median P/E this year of 23.5, which is the lowest median P/E in 6 years. However, in 2012, it traded as low as 17.2x. Sales are still expected to jump 20.2% in 2019, continuing its streak of 20% revenue growth. But do shares have to go lower for it to be a true bargain?
What else should you know about the FAANG stocks in 2019?
Find out on this week’s podcast.
[In full disclosure, the author of this article owns shares of FB, AMZN and GOOGL in her own personal portfolio.]
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