It keeps coming back to FANG. I am talking about how Action Alerts PLUS holding Facebook (FB) , Growth Seeker name Amazon.com (AMZN) , Netflix (NFLX) and Alphabet (GOOGL) keep winning and winning and winning, and the acronym which I coined four years ago this month has incredible staying power.
I don't think people realize how hard it is to stay on top in the tech world. When I broke into this business, BUNCH dominated: Burroughs, Univac, NCR (NCR) , Control Data and Honeywell (HON) . They were all aligned against IBM (IBM) . Most people have probably not even heard of the B and the U and the C. Honeywell converted into a broadline industrial and NCR remains a point of sale company.
But I bring up BUNCH only as an example of what typically happens to tech. The hottest don't stay hot, which is what is so amazing about FANG. When I coined the term, I did so because the stocks wouldn't quit in a sluggish environment.
Now they aren't quitting in a strong environment.
I don't know if you have watched the sinking Snap (SNAP) , but a lot of that has to do with the relentless innovations, or some would say, copies of Snap by Facebook's Instagram. Zuckerberg and company simply wasn't going to let Snap encroach on its territory. More important, the ad dollars keep going their way.
I read an important piece in thestreet.com by Eric Jhonsa last night that talked about how there may be more ad money coming to the web from newspapers, magazines and radio and to some extent television, but it is increasingly going more and more to Facebook and Google, Facebook because its ads are so tastefully targeted and Google because you use it at the all-important point of purchase.
But Google, now Alphabet, is becoming much more than just an ad-supported entity. It is in first place in autonomous cars, because it's logged the most miles by far and has had the fewest percentage disengagements -- the metric the California Motor Vehicles uses judge how often driverless cars need to revert to human drivers. Plus, Alphabet has become a leader in data hosting -- witness the $400 million Snap's paying them each year. These are definitively not ad-supported businesses. Neither would be the cable-like charges that Alphabet wants to put through for its YouTube channels.
Then there's Amazon, which continues to exert its dominance worldwide. I can only imagine the glee with which Amazon greeted this inclement weather. Stay-at-home people order. More customers, more money. It's become the unstoppable force that is destroying not just individual retailers, but whole malls.
The stock gives you a chance when investors panic and sell on a weak quarter, like the one just reported. The stock is now nicely above that last earnings-related dip.
Speaking of unstoppable and underrated, did you happen to see the sell to hold upgrade by Jefferies today on Netflix? Ouch. Jefferies had been telling people to stay away from this stock for ages, because the firm was concerned about competition from local players, high churn and a potentially flatter trajectory of growth. Wrong. Jefferies managed to upgrade using a survey of potential German and Indian consumers, saying the growth opportunity is larger than they had expected. No kidding. They raise their price target for this $144 and change stock from $95 -- jeesh -- to $135, a sad admission of just how off-base they were with the N in FANG.
One of the hallmarks of this market is the endless skepticism toward even the best of operators and the greatest of secular growth trends. FANG's got both, hence the incredible outperformance of Facebook, Amazon, Netflix and Google. Most amazing? They aren't just as good as when I dreamed up the acronym FANG. They're better.