The word FANG essentially means a large sharp tooth associated with dogs or wolves. No wonder it conjures frightening images of werewolves or Dracula in the general populace, who are steeped in myths and legends. But don’t you worry, this article isn’t meant to spook you with such stories.
FANG here represents the most well-liked and high performing tech stocks in the market that have generated impressive returns for the investors. The term was popularized by CNBC's Mad Money host Jim Cramer.
The word is an acronym where "F" stands for Facebook, Inc. FB, "A" stands for Amazon.com, Inc. AMZN, then there is the "N," which stands for Netflix, Inc. NFLX, finally the "G" which is Alphabet Inc. GOOGL, commonly referred to as Google.
These four technology powerhouses have performed phenomenally this year. Facebook, Amazon and Netflix have all posted gains of at least 50%, while Alphabet gained more than 30% on a year-to-date basis. The tech-heavy Nasdaq 100 and S&P 500 posted rallies of 28.8% and 17.4%, respectively so far this year.
FANG – The Rulers
Facebook and Alphabet dominate the U.S digital ad market. Per the latest report from eMarketer, both these companies are expected to hold 63.1% share of the total domestic digital ad market, up from the earlier expected number of 60.4% in 2017.
Their target advertising capabilities draw advertisers to these platforms, adds eMarketer. A giant user base is another major draw. Facebook has over 2 billion users while its subsidiary, Instagram has over 800 million users.
Alphabet's strong advertising revenues and improving paid click growth remain the primary catalysts. Its focus on innovation, AI, cloud, home automation space, strategic acquisitions and Android OS should continue to generate strong cash flows. Alphabet has shown good execution to date, more or less maintaining dominant share in a competitive, fast-growing search market.
Amazon rules e-commerce and cloud services with its Amazon Web Services (“AWS”) business. The company is benefiting from strong growth across all its businesses and especially the retail business remains very hard to beat on price, choice and convenience. On a global basis, AWS is now accessible across 46 Availability Zones (AZs) through 17 technology infrastructure regions worldwide. These AZs enable businesses to save costs, accelerate innovation, expedite the time to market as well as expand geographic presence within minutes.
Netflix is one of the leading video streaming platforms driven by expanding content portfolio and subscriber base. Its growing subscriber base is the primary factor that helps it generate significant revenues. The company remains confident of adding more subscribers as the trend of binge viewing is catching up fast. Netflix now has over 109 million subscribers globally. We believe continuing subscriber addition and expanding content portfolio are the key catalysts that will help Netflix to sustain growth going forward.
Despite remarkable growth of the FANG stocks, these aren't the largest standout in the tech sector this year. A small number of companies have posted gains that have crushed the likes of Facebook, Amazon, Netflix and Google this year. Notably, all four of these tech companies carries a Zacks Rank #3 (Hold).
Here are some notable tech companies that have outperformed the FANG bigwigs, in order of performance.
Moreover, these stocks either have a Zacks Rank #1 (Strong Buy) or 2 (Buy).
NVIDIA Corp. NVDA is a worldwide leader in visual computing technologies and the inventor of the graphic processing unit (“GPU”). Notably, GPU is a high-performance processor generating realistic, interactive graphics on workstations, personal computers, game consoles and mobile devices.
NVIDIA has a Zacks Rank #1 and a market cap of around $116 billon. The company’s expected earnings growth for the current year is 10.3%. Shares of NVIDIA have gained 76.2% year to date, substantially outperforming the 41.8% rally of the industry it belongs to. (Looking for the Best Stocks for 2018? Be among the first to see our Top Ten Stocks for 2018 portfolio here.)
Broadcom Ltd. AVGO is a designer, developer and supplier of analog as well as digital semiconductor connectivity solutions.
Broadcom sports a Zacks Rank #1 and has a market cap of around $106 billon. The company’s expected earnings growth for the current year is 13.8%. Shares of Broadcom have gained 50.2% year to date, substantially outperforming the 32.8% rally of the industry it belongs to.
Adobe Systems Inc. ADBE is one of the largest software companies globally. The company has been making great efforts toward establishing presence in cloud-related software areas such as documents and marketing.
Adobe Systems has a Zacks Rank #2 and a market cap of around $85.6 billon. The company’s expected earnings growth for the current year is 17%. Shares of Adobe Systems have gained 71.8% year to date, substantially outperforming the 38.9% rally of the industry it belongs to.
Baidu, Inc. BIDU is a Chinese-language Internet search provider and is based in Beijing, the People's Republic of China.
Baidu carries a Zacks Rank #2 and has a market cap of around $81.4 billon. The company’s expected earnings growth for the current year is 23.7%. Shares of Baidu have gained 41.9% year to date, substantially outperforming the 24.3% rally of the industry it belongs to.
Microchip Technology Inc. MCHP develops, manufactures and sells specialized semiconductor products used by the customers for a wide variety of embedded control applications.
The company has a Zacks Rank #2 and a market cap of around $20.5 billon. The company’s expected earnings growth for the current year is 12.2%. Shares of Microchip have gained 37.1% year to date, substantially outperforming the 23.5% rally of the industry it belongs to.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
Baidu, Inc. (BIDU) : Free Stock Analysis Report
Facebook, Inc. (FB) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Adobe Systems Incorporated (ADBE) : Free Stock Analysis Report
Broadcom Limited (AVGO) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Microchip Technology Incorporated (MCHP) : Free Stock Analysis Report
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