Deep Dive: This one stock stands out when looking at key data from the FAANG+ group

by | Oct 25, 2022 | Stock Market

This has been a difficult year for tech-oriented stocks, but smart long-term investors often look for bargains. Why not buy quality merchandise when it is on sale? The FAANG group of stocks is well-known, although it becomes complicated to list the companies when they change their names. The group includes Facebook holding company Meta Platforms Inc.
META,
+4.04%,
Apple Inc.
AAPL,
+1.41%,
Amazon.com Inc.
AMZN,
+0.61%,
Netflix Inc.
NFLX,
+3.66%
and Google holding company Alphabet Inc.
GOOGL,
+1.26%

GOOG,
+1.10%.

Considering that the FAANG acronym was meant to provide a simple catchall label for “big tech,” it is reasonable to add Microsoft Corp.
MSFT,
+0.92%
to the list — after all, its annual revenue dwarfs that of Netflix and it is the second-largest company in the S&P 500
SPX,
+1.31%
by market capitalization. And if we’re going to add Microsoft, we might as well throw in Tesla Inc.
TSLA,
+5.43%
because investors have such an interest in the company — the fifth-largest in the S&P 500. Among this group of seven stocks, Alphabet offers a compelling combination of a low valuation to expected profit, and high expectations for growth of sales and earnings through 2024. Here’s the FAANG+ group, ranked by market capitalization, with current forward price-to-earnings (P/E) ratios, P/E ratios as of Dec. 31, 2021, and year-to-date price changes through Oct. 24:
Company

Ticker

Market cap. ($ billion)

Market-cap ranking in S&P 500

2022 price change

Forward P/E

Forward P/E – Dec. 31, 2021

Apple Inc.

AAPL,
+1.41%

$2,402

1

-16%

23.2

30.2

Microsoft Corp.

MSFT,
+0.92%

$1,844

2

-26%

23.4

34.0

Alphabet Inc. Class A

GOOGL,
+1.26%

$1,340

3

-29%

17.7

25.4

Amazon.com Inc.

AMZN,
+0.61%

$1,221

4

-28%

65.1

64.9

Tesla Inc.

TSLA,
+5.43%

$667

5

-40%

38.2

120.3

Meta Platforms Inc. Class A

META,
+4.04%

$296

17

-61%

12.4

23.5

Netflix Inc.

NFLX,
+3.66%

$126

55

-53%

27.0

45.6

S&P 500

SPX,
+1.31%

-20%

16.3

21.5

Source: FactSet

Click on the tickers for more about each company, including full coverage of news and financial reporting. Click here for Tomi Kilgore’s detailed guide to the wealth of information available free on the MarketWatch quote page. Forward P/E ratios for the S&P 500 have also been included for comparison. At the end of 2021, the entire FAANG+ group traded at much higher P/E valuations than the index did. But now, after double-digit price declines in 2022 for the entire group, Meta is trading at a much lower valuation than that of the index. Alphabet is trading only slightly above the index’s P/E valuation. And that underlines what may be seen years from now as a golden buying opportunity for Alphabet’s stock. Over the past 10 years, Alphabet’s Class A shares (the shares were split into Class A and Class C in 2014, with only the …

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