In the old days, we used to call them by their acronym: FANG. I am talking about Facebook (FB), Amazon (AMZN), Netflix (NFLX) and Google (GOOGL), the companies investors reached for after every growth waning selloff.
Of course, only a Philadelphian who recognized one of our own would think about FANG, which struck me as humorous because it mimicked White Fang, the fabled character of the much-loved Soupy Sales, a comedian of some renown who came back to life this morning when I mentioned him on Squawk on the Street and people immediately started posting videos of the famous one's ridiculous puppet.
FANG's been reborn because of a confluence of events: a predicted slowdown of most technology because many companies are linked to the secular decline of personal computers while at the same time the freakin' strong dollar is taking away the upside of the industrials that had been leaders. Don't forget, we are going to get a rate hike this fall and it is going to further boost the dollar, and hedge fund managers are trying to get ahead of that monumental change.
Now, we don't know what Facebook's going to earn, but the stock went crazy last week on the back of the excellent Google quarter. Amazon caught not one, not two, but three pushes this morning which is reminiscent of what happened to the N in FANG, Netflix, last week. The pushes didn't steal from the upside from the amazing subscriber growth of Netflix. Sometimes I don't think it will do differently for Amazon when it reports. The stars seem aligned for a breakout of that tremendous growth story that had been stalled for a bit until it started breaking out the profitability of its Web services business. I expect more of that. (Amazon is part of TheStreet's Growth Seeker portfolio.)
The aforementioned Netflix blew through the momentary high levels that came with Carl Icahn ringing the register on a terrific trade. Netflix is facing a worldwide rollout in a well-poised fashion.
Google? What can I say? The company has always been a spendaholic, there's no doubt about it, and any sign of discipline and you knew the stock would pop, as it did last week when new Chief Financial Officer Ruth Porat, late of Morgan Stanley (MS), exerted an influence that said it might be better to return excess cash to shareholders than to keep spending it on pie-in-the-sky projects. That's an inferred analysis by me, one the company might bridle at. Believe me, though, it is what drove the stock higher and, after taking a breather, I believe will be ready to roll again.
With a slow-growth backdrop, people are reaching for other junior FANGs. I see some nascent farm-team players like Ambarella (AMBA), the company that's the brains inside a Go-Pro (GPRO) and most of the sophisticated drones that are coming on. The newly minted PayPal stock exhibits high growth prospects that won't be hindered by a Fed rate hike or a slowdown in Europe.
It's hard not to include the four horsemen of the Big Pharma apocalypse in the mix -- Biogen (BIIB), Celgene (CELG), Gilead (GILD) and Regeneron (REGN) -- all of which have specific catalysts that have been driving them higher. New drugs matter to these companies and they are buying them or building them with alacrity. They won't be kept back by a strong dollar, a Fed bent on hiking or a slowdown either foreign or domestic.
Finally, I think it is safe to say the inverted drug companies Allergan (AGN) and Valeant (VRX) are much sought after as growth pharmaceuticals, the two that have cracked the code -- the tax code, that is -- to buy drug companies and radically integrate them to make tremendous earnings strides. (Allergan, Facebook, Google and Morgan Stanley are part of TheStreet's Action Alerts PLUS portfolio.)
Now, FANG's in the lead and I am not going to attempt to come up with an acronym for the rest. Let's just say if you want super growth that won't be restrained by larger forces, this is the list. My advice is to buy only when the market's been hammered. They come back the fastest, but they go down the fastest, too.
