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Analyzing the FAANG Stocks: FB, AAPL, and AMZN

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Growth stock analysis

 

The FAANG stocks need no introduction. Their cumulative market cap forms 27% of the NASDAQ. The Fidelity NASDAQ Composite Index Track (ONEQ) has 44% exposure to technology. It has a PE (price-to-earnings ratio) of 23.9x and a YTD (year-to-date) return of 6.3%.

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Facebook

Facebook’s (FB) net income has grown at a three-year and five-year average of 75.7% and 213%, respectively. The company’s pre-tax margin grew from 35% in 2013 to 50.7% in 2017. The stock price has beaten the Internet content and information industry between 2013 and 2017. The stock was only beaten in 2016 by the S&P 500. The market cap had gained 268% between 2013 and 2017.

FB has gained 3.5% on a YTD basis.

The Cambridge Analytica data breach scandal resulting in an FTC investigation had negatively affected the stock price, market cap, and forward PE valuations. However, the stock has made some recovery following CEO Mark Zuckerberg’s testimony before Congress.

 

Apple

Apple’s (AAPL) net income has grown at a three-year and five-year average of 7% and 3%, respectively. The company’s pre-tax margin changed from 29.4% in 2013 to 28% in 2017. The stock prices have beaten the consumer electronics industry except for 2013 and 2016. The stock was beaten in 2013 and 2015 by the S&P 500. The market cap had gained 72% between 2013 and 2017.

AAPL has gained 10.7% on a YTD basis. The fall in stock prices from iPhone X demand problems gave way to a stock price rising as Apple beat 2Q18 sales estimates.

 

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Amazon.com

Amazon.com’s (AMZN) net income has grown at a two-year and four-year average of 125.6% and 82.4%, respectively. The company’s pre-tax margin grew from 0.7% in 2013 to 2.1% in 2017. The stock prices have beaten the specialty retail industry except for 2014. The stock was beaten in 2014 and 2016 by the S&P 500. The market cap had gained 208% between 2013 and 2017.

AMZN has gained 37.5% on a YTD basis. The company’s prices were driven by its earnings results for 1Q18.

Growth stock ETFs

The Vanguard Information Technology ETF (VGT) has 98% exposure to technology. It has a PE of 28.5x and YTD return of 10.4%. The Consumer Discretionary Select Sector SPDR Fund (XLY) has 96% exposure to the consumer cyclical space. It has a PE of 20.5x and a YTD return of 6%.

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