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Are the FANG stocks a buy?

The FAANG acronym stands for Facebook, Apple, Amazon, Netflix and Google (owned by Alphabet). If you owned these stocks over the past 10 years you would be sitting on very good gains.

However, things aren’t looking so rosy for some of them at the moment.

Facebook is under fire for its part in the data breach and privacy issues relating to Cambridge Analytica.

President Donald Trump has been aiming some of his Twitter tirades at Amazon due to its supposed cheap deal with US Post, although many market commentators believe President Trump is actually trying to hurt Jeff Bezos’ Washington Post. Amazon’s Echo speakers are under fire because Alexa supposedly might be listening to conversations all the time to listen for what people like and love and then show ads based on those likes.

Alphabet is being questioned, particularly in Europe, about its market dominance. It is already very powerful with its smartphone operating system Android, online search Google, online video YouTube, app store Google Play and navigation tool Google Maps. It also has Google Jobs, automated car project Waymo and its fibre network business.

Netflix is spending huge amounts of money on its own content because Disney is going to be launching its own online demand service in the next couple of years.

However, market commentators are correct in saying that all of these businesses are trading quite cheaply considering how much the profit has been growing each year and each quarter. Indeed, Alphabet is trading at around 25x forward earnings and is growing at 25% a year – it’s my pick of the FAANG stocks.

Foolish takeaway

As a group I think these are the best blue chips to own over the next 10 years because they are the ones that are driving innovation, challenging other industries and constantly improving. The current prices could look quite cheap in a few years’ time.

The above shares could be good ideas for tech investors, but I think these top shares could provide just as strong returns.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Facebook, and Netflix. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Amazon, Apple, Facebook, and Netflix. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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