jeudi 29 avril 2021

Why avoiding FAANG?

Have you seen Amazon last results? They were amazing.

Have you seen Alphabet last results? They were amazing.

Have you seen Apple last results? They were amazing. 

Have you seen Facebook last results? They were amazing... 

Some people ignore FAANG (Facebook, Amazon, Apple, Nettflix and Google/Alphabet) for some strange reasons. Maybe these people think that these companies are too big, not obscure enough, not related to "the next big thing"... Some people prefer to dig in the ground instead of going for something that is obviously interesting. 

But, even if FAANG are known by everybody,  they all do well, year after year. They have all you should be looking for. 

Yes, they're all huge, but they still grow a lot and they are dominant. Plus, some of them don't need to build new offices to grow. And their names are franchises. It's harder than we think to become a household name like that. 

Personnaly, more than 25% of my portfolio includes some FAANG stocks. If we add Microsoft (a similar stock), it's about one third of my portfolio. I really like all these stocks, because, while they are expensive, they're not sold at a crazy price (Amazon is very pricey, but it always been and it's more dominant, year after year).

Let's take a look at some numbers that show how amazing these stocks are:

Profit margins (profit margin above 20% = exceptional company):

Facebook: 34%

Amazon: 6%

Apple: 22%

Netflix: 14%

Alphabet: 26%

ROE (ROE above 20 = great company):

Facebook: 25

Amazon: 27

Apple: 82

Netflix: 35

Alphabet: 24

Performance 1 year / 5 years:

Facebook: 58% / 161%

Amazon: 46% / 424%

Apple: 86% / 470%

Netflix: 23% / 462%

Alphabet: 76% / 233%

Have you seen how much this group beats the market? Someone who bought these 5 stocks in 2016 achieved a performance of 350%. Yes. 350 fucking percent with 5 ultra obvious names that were already huge, 5 years ago. 

Who can afford to turn their back to these kind of companies? 

1 commentaire:

  1. Sometimes I think I should just be 100% QQQ forever instead of complicating things. 10x since the bottom of the Great Recession. When I first started investing 5 years ago, I would always hear how tech stocks were risky and will have a massive pull back any day.