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These FANG Stocks Are Best-Positioned To Hold Covid-Era Gains

Big Tech stocks, including the FANG stocks, are returning to favor among investors after being hammered in the tech stock sell-off earlier this year.




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Investment bank Barclays believes market leadership is shifting to secular growth stocks. That’s likely to buoy the FANG stocks — a group made up of Facebook (FB), Amazon (AMZN), Netflix (NFLX) and Alphabet‘s (GOOGL) Google — as well as Apple (AAPL) and Microsoft (MSFT). Barclays refers to those stocks collectively as the FANMAG stocks.

“We believe market leadership is likely to change from cyclical to secular growth stocks as the Covid recovery trade has mostly run its course,” Barclays analyst Maneesh Deshpande said in a note to clients late Tuesday. “Secular growth stocks look favorably positioned to benefit from the digital transformation that got accelerated during Covid.”

Digital transformation trends include cloud computing, e-commerce, streaming entertainment and digital advertising, Deshpande said.

Top FANG Stocks: Google And Amazon

“We particularly like GOOGL, AMZN and MSFT as we expect these stocks to hold on to their Covid market share gains and continue to benefit from the acceleration of digital transformation,” Deshpande said.

Google will profit from rising digital ad revenue as the economy recovers, he said.

“We expect Google to benefit from the recovery of its major ad spenders, including travel and tourism, and finance and insurance businesses,” Deshpande said.

Amazon got a business boost from the growth of e-commerce and cloud computing services during the Covid-19 pandemic. It should hold on to those gains during the recovery, he says.

Microsoft has benefited from the work-from-home shift during the pandemic and could see a lift as workers return to offices. Its Azure cloud business leads when it comes to hybrid computing workloads, Deshpande says.

FANMAG Stocks Rallying

Of the FANG stocks, all but Netflix are trading at or near record highs. The same goes for Microsoft.

Facebook stock broke out of a 31-week consolidation period at a buy point of 304.77 on April 5, according to IBD MarketSmith charts. It notched an all-time high of 343.42 intraday on Wednesday.

Amazon stock is approaching a buy point of 3,554.10 out of a cup base. That buy point is 10 cents above its record high of 3,554 reached on April 30. On Wednesday, Amazon stock dipped a fraction to 3,503.82.

Google stock broke out of a flat base at a buy point of 2,431.48 on June 10. The FANG stock hit an all-time high of 2,461.91 intraday on Wednesday.

On Monday, Microsoft stock cleared a buy point of 263.29 in a cup base. On Tuesday, it climbed further and obtained a market capitalization of $2 trillion. It’s the second company after Apple to reach that milestone. In intraday trading on Wednesday, it notched a record high of 266.83.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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