FAANG stocks are now in a bear market, descending 20% or more from their respective 52-week highs, according to CNBC. FAANG is the acronym for the group comprising Facebook, Apple, Amazon, Netflix and Alphabet’s Google.
Per a latest Wall Street Journal report, FAANG stocks have collectively lost around $575 billion in market cap since the beginning of October. According to CNBC, the group has lost $1 trillion in market cap since hitting their respective 52-week highs.
What’s Acting Against FAANG Stocks?
Investor skepticism over FAANG’s growth prospects have been the primary reason for the plunge. Moreover, macro issues like the U.S.-China trade war, interest rate hikes by the U.S. Federal Reserve, concerns over Brexit and Italian budget crisis have been overhangs on the tech sector as well as FAANG stocks.
Facebook has been the worst hit stock in the group. A string of screw-ups related to user data safety, sharing and handling procedures along with proliferation of fake news, terrorism-related content and political propaganda have hurt the stock this year. The slowdown in the company’s user growth rate coupled with increased security-related spending is expected to impede growth in 2019.
Google-parent Alphabet has also faced user privacy-related issues. In September, the company’s executives were questioned by lawmakers on allegations of bias in its search results, anticompetitive behavior and business dealings with China.
Meanwhile, slowing iPhone demand in the holiday season is expected to hurt Apple. Per Reuters, the company recently ordered production cuts for the three new iPhone models launched in September. Amazon’s lackluster holiday season guidance also failed to excite investors.
Although Netflix is currently the best performing stock among the FAANG’s to date, intensifying competition in the streaming market primarily due to the entry of Disney DIS and Apple is expected to mar prospects for the streaming giant.
Though FAANG stocks may not be appealing at the moment, there are some technology stocks that hold promise.
Zacks’ proprietary methodology comes in handy while zeroing in on these stocks. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer good investment opportunities.
Here are five stocks that have a favorable combination of Zacks Rank #1 and VGM Score of A.
Intel Corporation INTC — Santa Clara, CA-based Intel is the largest global semiconductor chip set manufacturer for PCs and notebooks.
Over the last 30 days, the Zacks Consensus Estimate for its fiscal 2018 earnings has increased 9.7% to $4.53, reflecting year-over-year growth of 30.9%.
AVX Corporation AVX — Fountain Inn, SC-based AVX is a leading worldwide manufacturer and supplier of a broad line of passive electronic components and related products.
The Zacks Consensus Estimate for its 2018 earnings has jumped 11.6% to $1.44 over the last 30 days, reflecting a year-over-year rise of 80%.
KEMET Corporation KEM — Based in Fort Lauderdale, FL, KEMET offers solid tantalum capacitors and multilayer ceramic capacitors.
The Zacks Consensus Estimate for its fiscal 2019 earnings has surged 34.1% to $3.34, reflecting year-over-year growth of 90.9%.
Comtech Telecommunications Corp. CMTL — Based in Melville, NY, Comtech designs, develops, produces and markets innovative products, systems and services for advanced communications solutions.
The Zacks Consensus Estimate for its fiscal 2019 earnings has remained steady at 96 cents over the last 30 days, reflecting year-over-year growth of 28%.
Diodes Incorporated DIOD — Plano, TX-based Diodes is a manufacturer and supplier of application-specific standard products primarily to the communications, computing, industrial, consumer electronics and automotive markets.
The Zacks Consensus Estimate for its 2018 earnings has risen 8.3% to $2.35, reflecting a year-over-year increase of 71.5%.