FANG stocks have made up some serious ground so far this year after a rough end to 2018.
Facebook (NASDAQ: FB), Amazon (NASDAQ: AMZN), Netflix (NASDAQ: NFLX), and Google-parent Alphabet (NASDAQ: GOOGL, GOOG), have gained more than $600 billion in market cap since their December lows, and—along with Microsoft (NASDAQ: MSFT), which is often grouped with the FANGs—now make up 12.6% of the S&P 500’s market value.
The four FANGs have jumped by double-digits so far in 2019, with Facebook currently up 35%, Amazon up nearly 23%, Netflix up 37%, and Alphabet up just under 16%. And one technical analyst says two of these stocks could be headed for breakouts.
“Sometimes, you have to sit back and wait a little bit, and I think that’s going to be key for two big stocks right now,” Matt Maley, managing director and equity strategist at Miller Tabak, said to CNBC on Tuesday. “The first one is Netflix, and the other one is going to be Facebook.”
According to Maley, Netflix’s stock is caught in a range and if it can break above the current resistance line—which is at $379,—shares could surge far higher. The catalyst that pushes the stock out of its current range could come as early as next week when Netflix is expected to issue its earnings report.
Maley said Facebook has also been trading in a tight range and it could be pushed out of this range after it reports earnings in two weeks. However, Maley urges caution.
“Every single time in the last five quarters, it’s seen a huge gap in either direction right after that report. So we have to be a little bit careful on those dates,” Maley said. “So, right now, I’m kind of in a wait-and-see attitude, especially since they’ve seen such big runs right here, and I want to see more proof before I can really jump back on board and see if they’ll go higher. If they do, and they do break out, boy, the sky’s the limit.”
Mark Tepper of Strategic Wealth Partners also likes Netflix, but is lukewarm on Facebook’s trajectory. His favorite of the FANGs? Amazon.
“My favorite of the group is Amazon, without a doubt,” Tepper said. “Whenever growth is scarce, investors tend to flock towards companies and industries that are outgrowing the S&P 500, and there’s no question about it: We are in a slow-growth economy right now, and there’s not a company in the FANGs that’s growing faster than Amazon.”
Tepper also pointed out that Amazon is gaining market share from other FANG companies.
“Throw in the profit tailwinds that are coming from advertising, and there’s no doubt about it that they are taking ad dollars from Google and Facebook right now,” Tepper said. “So, when you put all that stuff together, the way I look at it is you have a company here with Amazon that should not be trading at 10% off its all-time highs when the S&P is… maybe 2% off right now. So, we like Amazon. That’s our pick there.”
Tepper isn’t the only one bullish on Amazon. There are currently 45 Buy ratings for the stock, and analysts’ average price target for AMZN is $2,146, suggesting possible upside of 16.4% over the next twelve months. Earlier this week, Societe Generale initiated coverage on AMZN and set their price target at $2,370 – nearly 29% higher than Thursday’s closing price.
“The most remarkable progress at Amazon over the last few years has been the large jump in profitability,” Societe Generale analyst Arnaud Joly wrote to clients, citing the company’s advertising and Amazon Web Services cloud-computing divisions. “We think investors may pay more attention to earnings growth at Amazon rather than focusing solely on top-line momentum.”