The FAANG stocks — Facebook (FB - Free Report) , Amazon (AMZN - Free Report) , Apple (AAPL - Free Report) , Netflix (NFLX - Free Report) and Alphabet (GOOGL - Free Report) — have been outperforming the market over the past three months buoyed by the initial U.S.-China trade deal. Hopes of better-than-expected earnings releases are also adding to the strength.
Streaming giant, Netflix, the first company in the FAANG group to report Q4 earnings on Jan 21 after market close, came up with strong results for fourth-quarter 2019. The company topped both earnings and revenue estimates, and delivered strong subscriber growth. However, it offered a weak outlook, raising concerns about its dominance in an increasingly crowded field (read: ETFs in Focus on Netflix's Solid Q4 But Weak Outlook).
Facebook is expected to release its earnings report on Jan 29 after market close. Our proven model predicts an earnings beat for Facebook this time around as it has a Zacks Rank #3 (Hold) and an Earnings ESP of +2.62%. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The social media giant has seen positive earnings estimate revision of a penny for the to-be-reported quarter over the past month. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The current Zacks Consensus Estimate for the yet-to-be reported quarter indicates earnings increase of 5.46% from the year-ago reported figure. Revenues are expected to increase 23.40%. However, Facebook came up with an average negative earnings surprise of 20.06% for the last four quarters. The stock has a VGM Score of A and belongs to a bottom-ranked Zacks industry (bottom 33%). Shares of FB were up 15.1% in the past three months.
Amazon, slated to report on Jan 30 after market close, has a Zacks Rank #3 and an Earnings ESP of +10.23%. The stock witnessed no earnings estimate revision over the past 30 days for the fiscal fourth quarter. However, the Zacks Consensus Estimate represents a substantial year-over-year decline of 34.1% (read: ETFs to Tap on Amazon's Record Holiday Sales).
Amazon’s earnings surprise history is impressive, with a positive earnings surprise of 4.41% on average for the last four quarters. Additionally, the company is expected to report revenue growth of 18.81%. The stock has a top Growth Score of A and falls under a bottom-ranked Zacks industry (bottom 30%). The online e-commerce behemoth has witnessed a share price increase of 4.7% over the past three months.
Apple has a Zacks Rank #2 and an Earnings ESP of +4.08%. The stock saw positive earnings estimate revision of a couple of cents over the past 30 days for the fourth quarter and its earnings surprise history is strong. It delivered a positive earnings surprise of 3.64%, on average, over the past four quarters. Apple is expected to post substantial earnings increase of 8.37% from the year-ago quarter. Revenues are expected to rise 4.07% year over year. It has a VGM Score of C and belongs to a top-ranked Zacks industry (top 44%). The stock has rallied 27.8% over the past three months. Apple is set to report earnings on Jan 28 (read: Apple at All-Time High, Poised for an Upbeat Q1: ETFs to Benefit).
Alphabet has a Zacks Rank #2 and an Earnings ESP of -1.95%. It saw negative earnings estimate revision of a penny over the past 30 days for the to-be-reported quarter and its earnings are expected to decline 0.08%. Additionally, the stock has a VGM Score of C and falls under a bottom-ranked Zacks industry (bottom 33%). However, its earnings surprise track over the past four quarters is good with the beat being 1.75%, on average. Revenues are expected to increase 20.73% from the year-ago quarter. The Internet behemoth has gained 13.8% in the past three months. The company will report after the closing bell on Feb 3 (see: all the Technology ETFs here).
ETFs to Tap
Given this, investors may want to play these stocks with the help of ETFs. Below, we have highlighted five ETFs having the largest exposure to FAANGs.
MicroSectors FANG+ ETN (FNGS - Free Report) : This ETN accounts for 10% share in each of the FAANG stocks (read: S&P 500 Hits New Highs: ETFs Soaring to Start 2020).
iShares North American Tech ETF (IGM - Free Report) : This product accounts for about 37.3% in the FAANG group and has a Zacks ETF Rank #2 with a Medium risk outlook.
Invesco QQQ (QQQ - Free Report) : This fund makes up for 30.3% share in FAANGs and has a Zacks ETF Rank #1 with a Medium risk outlook.
iShares Evolved U.S. Technology ETF (IETC - Free Report) : This fund accounts for 27.7% share in FAANG stocks (read: 5 Low-Cost Tech ETFs for Investors).
iShares Russell 1000 Growth ETF (IWF - Free Report) : This ETF allocates a combined 20.7% share in FAANG stocks and has a Zacks ETF Rank #1 with a Medium risk outlook.
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