Point View WealthPoints

Is FAANG Long in the Tooth?

Point View's Managing Director, John Petrides.

Investors love to rally around a stock story. Today it’s all about the FAANG stocks. Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX) and Google (GOOG) are a major reason why the S&P 500 rallied so much in 2017. Mr. Market is convinced the FAANGs are impervious to a sell-off. “Its different this time” is ringing loud and clear, but will the outcome really be that different?

Let’s take a walk down memory lane. The Nifty-Fifty were a basket of 50 blue chip, stable growth companies that drove stocks higher during the late 1960’s and early 70’s. Enter 1973. With inflation skyrocketing, and Watergate and the Vietnam Conflict adding political and social disarray to the country, stocks plummeted. Some of the Nifty-Fifty fell 70-90% from their highs.

Fast forward to the Dot-com era of the late 90’s, which created one of the great asset bubbles in the history of the stock market. Future expectations of anything related to the internet were so far ahead of actual company fundamentals, that valuations based on “eye-balls” went through the roof. When the bubble burst, so too did many of the dotcoms.

Sign Up for E-News

    In 2001, China joined the World Trade Organization, sparking a great run into commodity stocks. Investors stockpiled their portfolios into BRIC (Brazil, Russia, India and China) stocks and funds, chasing China’s never-ending growth. When the global economy came to a standstill in 2008, the BRICs came tumbling down.

Understanding the bull case for the FAANGs is easy. Arguing the bear case is not, especially when the trailing performance for these companies is so spectacular. Here are the Cliff notes (happy to discuss in more detail):

FB: Privacy issues are percolating. Russian tampering of the US elections through Facebook is a big red flag. Regulatory risk does not seem to be priced into the stock.

GOOG: Like FB, GOOG dominates the ad world, but competition from other social media sites, the use of Apps, and voice recognition (think Alexa), reduce the traditional way of thinking about the internet. GOOG has tremendous assets like YouTube, but advertisers are cautious given the content is not entirely filtered.

NFLX: NFLX is the most egregious of the group from a valuation standpoint. The company continues to grow subscribers globally, but its future growth relies on being able to create new content. Content is king in the media world, but it is very difficult to stay on top.

AMZN: Any other company with thin margins, little profitability, and a management team that discloses very little information, and the stock would be a perennial loser. Instead, investors cannot get enough of AMZN. The moment Amazon takes its foot off the gas pedal for reinvesting in its business and allows profits to fall to the bottom line is, ironically, when the valuation multiple will decline and with it the stock price.

AAPL: The next iPhone upgrade cycle has begun. However, all of the other FAANGs are going after Apple’s dominance. Amazon is pricing its hardware devices so low to destroy iPad and AppleTV. YouTube, Netflix and Amazon Prime TV are already established players in the content world and growing, a place Apple has been slow to embrace.

Investors should look to the unloved sectors. Try AT&T (T), Hanesbrands (HBI), and GlaxoSmithKline (GSK). All three are high quality companies that are in depressed industries right now. Telecom was the worst performing sector in the S&P 500 in 2017. Assuming T completes its merger with Time Warner (TWX), the combined entity will have created an end-to-end communications-media company controlling wireless, satellite (DTV), and content (HBO). At current prices AT&T offers investors a 5% dividend yield, so you get paid to wait.

The market hates retail right now. However, HBI is the #1 or #2 player in every category in which it competes. The stock is trading at a 50% discount to the market, but at current prices offers investors a 9% free cash flow yield.

Finally, healthcare stocks have sold off on renewed fears of regulating drug prices. GSK has three very strong franchises in HIV, vaccines, and consumer, which generate significant cash flow. They return that cash to shareholders in a big dividend, current yield of 5.8%. At current prices the company is worth more in parts than it is currently being valued as a whole.

Note: John J. Petrides, MBA, is a Managing Director and Portfolio Manager at Point View Wealth Management, Inc., a registered investment advisor at 382 Springfield Ave., Summit. Certain clients of Point View own shares of all stocks mentioned. Mr. Petrides owns shares of Apple (AAPL), GlaxoSmithKline (GSK), and AT&T (T) personally.

CNBC has named Point View to its list of Top 100 Fee Only Wealth Managers in America! 

Point View Wealth Management, Inc. works with families providing customized portfolio management services and comprehensive financial planning, to develop and achieve their financial goals. We are independent and fee only.  How can we help you?  Contact John Petrides (jpetrides@ptview.com), David Dietze (ddietze@ptview.com), or Claire Toth (ctoth@ptview.com), or call (908) 598-1717 to learn more.


The opinions expressed herein are the writer's alone, and do not reflect the opinions of TAPinto.net or anyone who works for TAPinto.net. TAPinto.net is not responsible for the accuracy of any of the information supplied by the writer.

TAP Into Another Town's News:

You May Also Be Interested In

Sign Up for E-News


Driver Escapes Icy River After Car Goes Off GSP Near Clark/Cranford Border

March 21, 2018

CLARK, NJ — A car went off the road and into the river on the northbound Garden State Parkway between the Clark and Cranford exits during Wednesday night’s snow storm.

According to Clark’s chief of police, Pedro Matos, the car’s driver managed to escape the water — divers went into the river and determined the car to be empty. The sole occupant was ...

Mayor Brindle’s Update, Feb. 13

March 14, 2018

The following are highlights from the update that Mayor Shelley Brindle gave at Tuesday night’s town council meeting.

Last week’s back to back nor’easters left a wave of destruction that Westfield hasn’t experienced since Hurricane Sandy in 2012. Three thousand homes lost power. Over 40 roads were closed due to downed wires and/or trees. Our police responded to ...

Upcoming Events


Fri, March 23, 12:00 PM

Resolve, Scotch Plains

Free Teen Anxiety Group (Ages 14-17) at Resolve


Sat, March 24, 10:00 AM


March for Our Lives - Westfield

Government Law & Justice

Sat, March 24, 10:00 AM

Burent Middle School , Union

Union County Wide - March for Our Lives

Government Law & Justice

Westfield Police Blotter: More Than $2K Worth of Items Reported Stolen from Business, & More

March 21, 2018

March 11, 2018 6:42 p.m.

Marion Bethea, age 56, of Roselle, was arrested on the strength of an outstanding warrant for her arrest from Columbia Municipal Court in the amount of $500 pursuant to a motor vehicle stop. Subject was processed and released on recognizance.


March 16, 2018 11:16 a.m.

Blas Barquin, age 34, of Cranford, NJ, was arrested on the strength of an outstanding ...

All Are Invited to Learn More about Youth & Family Counseling Service

March 21, 2018

Youth & Family Counseling Service (YFCS) has been helping area residents coping with mental illness, substance abuse and behavioral health issues since 1918. As a celebration of 100 years of service, all are invited to a gathering on Sunday, April 8, from 3 to 5 p.m. at the Community Room of The Pointe at Garwood.

Started 100 years ago as the Mission of Help by St. Paul’s ...

'Trying' explores age, youth and points of history in poignant production

‘Trying’ explores youth, age and points of history in poignant production

By Liz Keill

NEW BRUNSWICK, NJ – The George Street Playhouse presents an engrossing, two-character play based on the real life of Francis Biddle, former Attorney General.

Biddle, a Harvard educated lawyer, served under Franklin Roosevelt and later Harry Truman during the Nuremberg Tribunal. His ...

Can I Change My Partner?

March 21, 2018

Couples oftentimes look to change the “other.” “If only” the other would make these changes, or do as I say, our relationship would be great. We tend to focus on the other. We tend to focus on changing the other. We tend to focus on the other’s negative behavior. Couples like to report what their spouse/partner is doing and how they are ...

16 Homes Sold Last Week in Westfield, Scotch Plains, Fanwood, Mountainside & Cranford

Sixteen homes sold last week, March 11 to March 18, 2018, in Westfield, Scotch Plains, Fanwood, Mountainside and Cranford:*


TOWN        ADDRESS                  STYLE           RMS    ...

Charitable Spirit Alive and Well in Westfield Public Schools

Students, staff and parents in Westfield Public Schools continue the district’s long tradition of helping others both in and outside of the community, with a number of students recently recognized for their efforts.

Fifteen Westfield High School juniors and sophomores were honored by the Community Food Bank of New Jersey for collecting more than 5,000 pounds of food items for families in ...


AtlantiCast: Episode 13

On this episode of AtlantiCast, new clinical studies in the fields of cardiology and immunotherapy, national and statewide recognitions for Atlantic Health System medical centers and the inaugural AtlantiCast Collab Challenge!


The Day After

Some years ago, the United Nations held the International Summit on Sustainable Development, here in Johannesburg. The Summit was a great success. One wonders, though, whether all the wonderful decisions and resolutions that were adopted were ever implemented. In other words, were they themselves sustainable?

Good ideas and worthwhile projects are suggested regularly. The question is, do they ...


Kathleen Marie Christian (nee Helmstetter), age 73 of Surf City, NJ, passed away peacefully at home ...
Read more

Suspended Hillsborough HS Athletic Director Charged with Theft

March 19, 2018

HILLSBOROUGH, NJ — Suspended Hillsborough High School Athletic Director Michael Fanizzi has been arrested and charged with the theft of $10,704 in athletic event receipts over a four-year period from 2013-2017, according to Somerset County Prosecutor Michael H. Robertson.

Fanizzi, 53, a resident of Conover Way in Hillsborough who had been athletics director for 14 years, had been ...