Should You Still Buy The FANG Stocks?

Audio Length: 00:28:34

FANG stocks are breaking out to new highs again, including those in FANG 2, which in the BMO Fang Index 3x Leverage ETF (FNGU) means Alibaba, Baidu, NVIDIA, Tesla and Twitter.

Is it too late to get in?

Or is there more upside?

Lots of pundits are wringing their hands about valuation and comparing 2018 to 1999-2000, just before the dot-com bust.

Do the FANG Stocks Have Stretched Valuations?

  1. Facebook (FB - Free Report) is trading with a forward P/E of 25.3. This is the cheapest its been since its IPO. In that year, in 2012, it had a median forward P/E of 198.
  2. Apple (AAPL - Free Report) has been a value stock for years. Just 2 years ago, in 2016, it traded with a forward P/E of just 12. It’s not surprising that that’s when Warren Buffett started to buy. It currently trades with a forward P/E of 16.7, which is its highest in years but is in line with the S&P 500.
  3. Amazon (AMZN - Free Report) has never been about a P/E. But Dave points out, that if you look at other valuations, such as the P/S ratio, which is just 4.29, it doesn’t seem overly expensive.
  4. Netflix (NFLX - Free Report) has never been “cheap”. Back in 2012, before the Crown, it was trading with a median forward P/E of 2,190. It has a P/E of 125 now. But investors are buying the growth story.
  5. Alphabet (GOOGL - Free Report) was cheapest in 2012 when it traded at 17x. Since then, it’s traded in the 20s. It’s current forward P/E of 28 is the most expensive the stock has been on a P/E basis in 6 years.

What about FANG 2?

Tesla is the only FANG or FANG 2 stock to be in the red for the year. It’s down about 10%. Dave and Tracey talk about whether it is a buying opportunity or not.

Should you be in Alibaba or Baidu if a trade war breaks out?

And what’s the story with NVIDIA? Does it still have its mojo?

Find out the answer to all of this and more on this week’s podcast.

Disclosure: I own shares of FB, GOOGL and AMZN in my personal portfolio.

Disclaimer: Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the  more

How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.
Chee Hin Teh 4 years ago Member's comment

Thanks for your information