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Leon Cooperman: FANG Stocks’ Valuations Indicating Some Surprise

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May. 31 2018, Published 4:41 p.m. ET

Leon Cooperman on FANG stocks

Hedge fund manager Leon Cooperman shared his latest views on FANG stocks (Facebook, Amazon, Netflix, and Alphabet) in a May 22 CNBC interview. The billionaire value investor has a strong belief in these stocks.

Cooperman said, “A lot of these FANG stocks with the exception of Amazon support very very reasonable valuations relative to their growth rates.”

He continued, “The biggest concern I have frankly is government intervention. The government looking at their success and dominance and sticking their beak into their business.”

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FANG stocks’ performances

The FANG stocks are the leading high-growth technology stocks of the S&P 500 Index (SPY) and have been driving the bull market since 2009. These stocks have witnessed robust performance in the last nine years. Facebook (FB) has returned 654.0% in the past five years, and it’s currently trading at a price-to-earnings multiple of ~27.5x.

Amazon’s (AMZN) stock price has jumped 494.0% in the past five years. AMZN stock is trading at a comparatively higher price-to-earnings multiple of 256.1x, compared to its technology (QQQ) peers. 

Similarly, Netflix (NFLX) has registered a strong performance in the last five years and has risen 1,047% in the last five years. NFLX stock is trading at a higher price-to-earnings multiple of ~211.5x. Alphabet’s (GOOGL) stock price has risen 150.0% during this period.

According to Cooperman, with the exception of Amazon, other FANG stocks valuations look very reasonable. The stronger earnings growth mainly supporting this valuation and these stocks could rise further higher if their valuation and earnings growth support this trend.

In the next part of this series, we’ll analyze Cooperman’s view on Facebook.

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