Recently, the new fintech terms came to town. We are already used to certain terms such as FAANG, FANG and even FAAMNG. When it comes to stocks, and especially technology-related ones, the times are certainly “a-changing”.
2020 began already as a pretty turbulent one. With great geopolitical tensions, an unsure trade deal between the U.S. and China, Donald Trump’s impeachment (moreover, Meghan and Harry are leaving the Crown) – it seems that there is going to be a pretty tough year for big companies.
What to Keep?
Though the market is changing quickly there are some leaders that definitely deserve your attention in the 2020s.
Facebook still has to come out with its Libra. In last ‘decree’ its CEO Mark Zuckerberg did publicly, he didn’t mention the cryptocurrency nor by a single word. However, if we look at the price of stocks in 2019, they gained 56.6%. It had a pretty tough 2018 when it fell around 25.7% mostly regarding the fallout of a string of data-privacy scandals and the threat that the company would be subject to increased regulation from government bodies.
However, even though both Zuckerberg and Calibra’s CEO David Marcus were grilled in front of the Senate, as regard to Libra, it seems it didn’t do any harm. Not just that, but for the 2020 fiscal year, the company is said to employ more people and increase its spending on marketing and other growth initiatives. As predicted, total expenses should be around $54 billion and $59 billion. The stock at the closing on Friday was worth $218.06 with a slight fall of 0.11%.
2019 was pretty much underwhelming for Amazon stocks that got the grade “underperformed” by the great S&P 500 index. And they did. During the last year, the stock fell by nearly 9 percentage points. However, that is exactly the thing that makes it the best option to buy. Some analysts even expect it to rise by more than 34% in 2020. The key lays in Amazon Web Services (AWS) and advertising whose 9-month revenue increased 38% year over year, easily outpacing its consolidated revenue growth of 20%.
More importantly, the cloud computing segment boasts a trailing-9-month operating margin of 26% versus Amazon’s consolidated operating margin of about 6%. The price at the closing on Friday was falling by 0.94% to $1,883.16.
Even though it came as an almost safe haven to investors in 2019 as now the Apple stock became a trillion-dollar headache. Last year, Apple stock soared 86% adding a huge $579 billion in new market value. That 12-month gain is more than the total value of all but four other companies in the S&P 500 index.
However, let’s not forget that Apple typically announces changes to its capital return program in April of each year, so the company is likely contemplating what it will do for 2020. The price of the stock at the closing and in the after-hours was up by 0.11% to $310.67.
Google stock rose approximately 30% in 2019. In the September quarter, Google bought $6 billion of its own stock, 60% more shares than the prior quarter. Google in July announced a $25 billion stock buyback, double the size of the previous share repurchase unveiled in early 2019.
At the beginning of the year, Google stock reached the all-time highs above $1,400, jumping well above a 5% chase zone from the 1,268.49 cup-with-handle buy point. For buying, maybe it would be good to wait for a secondary entry, like a future bounce off the 50-day or 10-week moving average, or for a new base to form. At the last close on Friday in after-hours trading, the stock was up 0.08% to $1,430.
Who to Lose?
However, not all the leaders are ready to keep the same positions in a new decade.
In the last ten years, Netflix stock rose 4,100% and in the last year, it was up by 23%. However, the company’s problem seems to be its competing in a cash-burning industry which has attracted deep-pocketed rivals. And these rivals will raise the cost of competing while capping the price increases that have kept Netflix’s revenues growing.
After all, CNBC’s Jim Cramer, who popularized the acronym FAANG, said already in October last year that it’s time to take out Netflix and replace it with Microsoft. Netflix stock closed on Friday in after-hours trading at $329,80 up by 0.23%.
Who to Add?
While some companies are leaving the top, some others are entering the game.
Not because Cramer said so, but because shares of this giant gained 55.3% in value last year That outperformed the 28.9% return of the S&P 500 index.
Microsoft has good long-term growth opportunities in its Intelligent Cloud segment, as large businesses migrate data systems over to the cloud. Azure revenue rose 59% year over year in the fiscal first quarter, which followed 64% growth in the previous quarter. At the closing, on Friday the price of the stock was down 0.03% to $161.30.
The truth is – Tesla seems to be something relatively different. The fact that it provides a physical product makes it more vulnerable than others. But, the truth is that the shares of this electric car maker keep hitting record prices. The company recently reported that its global deliveries rose more than 50% last year. It said it delivered a record of about 112,000 vehicles in the fourth quarter and about 367,500 for the full year. The stocks on Friday in after-hours trading were a little bit down (but still on record) by 0.03% to $478.15.
So, it all says that one day we could stop talking about FAANG and switch to FAAMG or even FAAMGT, who knows.
Author: Teuta Franjkovic