One of the classic FAANG stocks stands out as a better buy than the rest today. Read on to see which tech titan should be your next buy.
Most of the companies on the venerable FAANG list are well-known masters of artificial intelligence (AI). Meta Platforms (META 1.88%) builds lots of AI-powered smarts into its Facebook, Instagram, and WhatsApp platforms. Amazon.com (AMZN 0.95%) and Alphabet (GOOG 0.32%) (GOOGL 0.23%) sell cloud-based AI tools and services to other companies. Apple (AAPL 0.48%) may not promote its AI use as heavily as its FAANG colleagues, but you know there's a lot of machine-learning tech involved in every Cupertino gadget.
They are great companies in their own right, and I would gladly recommend any of them when the stock price is right. However, most of them are soaring on a marketwide AI frenzy. So I'll just wait for them to cool down before making any share-buying moves. Meanwhile, I've got my eye on the lower-priced but just as exciting Netflix (NFLX 2.58%) stock instead.
The media-streaming veteran is changing before our eyes, leaning on new ideas such as ad-supported subscription plans and password-sharing mitigation tactics. Netflix also faces economic challenges while wrestling with two concurrent Hollywood strikes. So I get why Mr. Market is keeping a lid on Netflix's stock price right now, and I'm not ashamed to take full advantage of the red-tag discount.
Let me tell you why Netflix is easily the best FAANG stock to buy right now. In short, the ongoing strategy shift is an overnight success that was years in the making.
From high growth and skimpy profits...
Once upon a time, Netflix was a classic growth stock. The company was barely profitable in terms of after-tax earnings, and the production of original Netflix content burned through billions of dollars of negative free cash flows.
But those temporary losses didn't matter. Netflix's long-term business plan and accounting practices pointed to soaring cash flows in the future based on the massive global-user base it was building in the 2010s. Sometimes you have to spend money now in order to make much more money later.
Pedal to the metal, the company built an award-winning and subscriber-gaining growth machine. The revenue growth averaged out at 30% across that decade. By the end of 2009, 11.9 million people subscribed to the red DVD-mailers service. Ten years later, DVD membership had shrunk to 2.1 million names, but the streaming service reached 167 million households around the world.
During this period of extreme growth, Netflix critics complained about skimpy bottom-line earnings and an unclear payoff for the massive cash investments in original content.
...to rich profits and skimpy growth
Having achieved an enormous business scale and facing a difficult economic environment, Netflix has shifted into profit-taking mode. Year-over-year membership growth was just 8% in the second quarter of 2023, with 238 million streaming subscribers, and the ancient DVD service is no more.
But Netflix reported $4.2 billion of bottom-line earnings over the last four quarters along with $4.3 billion in free cash flows. The management style has abandoned the old subscriber-growth-at-any-cost to focus on profitable revenue growth instead.
In other words, Netflix is doing exactly what its critics were asking for in the 2010s. Now, the bears worry about slowing subscriber growth instead. You can't please some people, right?
The stock price, up by 33% in 2023, is at the very bottom of the AI-driven FAANG heap. Shares are changing hands at reasonable valuations such as 5.4 times trailing sales or 25 times forward-earnings projections. Never mind that Netflix was a data-powered AI beast long before ChatGPT made it cool. This is a powerful growth stock trading at modest stock prices even without an AI-fueled booster.
Just as every good Netflix series deserves a binge, this stock deserves a buy. The company is cashing in on the investments it made in the 2010s. Don't miss the next season of Netflix's shareholder saga; it promises to be a blockbuster.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, 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. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Anders Bylund has positions in Alphabet, Amazon.com, and Netflix. The Motley Fool has positions in and recommends Alphabet, Amazon.com, Apple, Meta Platforms, and Netflix. The Motley Fool has a disclosure policy.
FAQs
Coinbase, Nvidia, Palantir, and other tech names dominate the list of the year's best stocks. Amid a strong stock market rally in 2023, Coinbase COIN performed best among U.S.-listed stocks covered by Morningstar analysts, as the cryptocurrency exchange platform rebounded from a steep downturn in 2022.
Which of FAANG is best to buy? ›
Best FAANG Stocks To Invest In
- Netflix, Inc. ( NASDAQ:NFLX) Number of Hedge Fund Holders: 102. ...
- Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) Number of Hedge Fund Holders: 107. ...
- Advanced Micro Devices, Inc. ( NASDAQ:AMD) ...
- Adobe Inc. ( NASDAQ:ADBE) ...
- salesforce.com, inc. ( NYSE:CRM) ...
- Apple Inc. ( NASDAQ:AAPL)
Which stock will perform well in 2023? ›
Performance of the top 5 stocks of 2023
Stock Symbol | Market Price Rs | 1-year Returns (%) |
---|
M&M | 1,172.00 | 41.54 |
BRITANNIA | 4,301.85 | 33.84 |
NTPC | 177.90 | 24.38 |
HINDUNILVR | 2,535.00 | 22.04 |
6 more rowsDec 12, 2023
What is replacing FAANG stocks? ›
Today, Microsoft is a common substitution for Netflix in big tech stock groupings because it has a trillion-dollar market cap like Apple, Alphabet and Amazon. After Facebook's rebrand to Meta in 2021, Cramer proposed replacing FAANG with MAMAA — an acronym for Meta, Apple, Microsoft, Amazon and Alphabet.
What stock has the most potential to grow in 2023? ›
Best-Performing Growth Stocks in 2023
- ACM Research, Inc. (NASDAQ:ACMR)
- Rover Group, Inc. ( NASDAQ:ROVR)
- FTAI Aviation Ltd. ( NASDAQ:FTAI)
- Applied Digital Corporation (NASDAQ:APLD)
- Talkspace, Inc. ( NASDAQ:TALK)
- Oscar Health, Inc. ( NYSE:OSCR)
- Duolingo, Inc. ( NASDAQ:DUOL)
Which stock will boom in 2024? ›
Best stocks in 2024
S.No. | Name | CMP Rs. |
---|
1. | Man Infra | 195.72 |
2. | BLS Internat. | 357.60 |
3. | Black Box | 558.90 |
4. | RHI Magnesita | 599.10 |
22 more rows
What are the top Fang stocks? ›
The acronym FANG was coined by The Street's Bob Lang and popularized by Jim Cramer on his CNBC TV show Mad Money. 2 This acronym refers to the stocks of four prominent American technology companies—Meta (META) (formerly Facebook), Amazon (AMZN), Netflix (NFLX), and Alphabet (GOOG).
What are the next Fang stocks? ›
4 Stocks That Might Be the Next FANG
- Nvidia (NVDA): The Future Facebook. ...
- Alibaba (BABA): The Future Amazon. ...
- Square (SQ): The Future Netflix. ...
- Broadcom (AVGO): The Future Google. ...
- Those four stocks are great candidates to become the next FANG stocks.
What is the best ETF for FAANG stocks? ›
Advisor Instl.
- Invesco QQQ Trust, Series 1. QQQ | ETF | ...
- Vanguard Growth Index Fund. VUG | ETF | ...
- iShares Russell 1000 Growth ETF. IWF | ETF | ...
- iShares S&P 500 Growth ETF. IVW | ETF | ...
- Schwab U.S. Large-Cap Growth ETF. SCHG | ETF | ...
- Vanguard Russell 1000 Growth Index Fund. ...
- SPDR® Portfolio S&P 500 Growth ETF. ...
- ProShares UltraPro QQQ.
Which stock will be doubled in 2023? ›
Sanghvi Movers, Precision Camshafts, Schneider Electric Infrastructure, Kesoram Industries, Electrosteel Castings, Tanfac Industries, GE T&D India are to name a few that have gained 143-312% so far in 2023.
Stocks with good 1 month returns
S.No. | Name | ROCE % |
---|
1. | Life Insurance | 72.95 |
2. | Colgate-Palmoliv | 96.80 |
3. | Page Industries | 45.02 |
4. | Infosys | 39.99 |
22 more rows
What stock is expected to skyrocket? ›
10 Best Growth Stocks to Buy for 2024
Stock | Implied Upside* |
---|
Meta Platforms Inc. (META) | 25.8% |
Tesla Inc. (TSLA) | 4.5% |
JPMorgan Chase & Co. (JPM) | 9.6% |
Exxon Mobil Corp. (XOM) | 12.0% |
6 more rowsJul 22, 2024
What are the golden 7 stocks? ›
The “Magnificent Seven” might sound like the title of an old Western film or what a large family might name its group chat, but in finance the moniker is being used to describe a group of high-performing tech stocks: Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta and Tesla.
What 7 stocks are driving the S&P 500? ›
Here's what to know. The 10 largest U.S. companies accounted for 14% of the S&P 500 stock index a decade ago. Today, they account for more than a third. Tech euphoria has helped drive up the “Magnificent Seven” stocks: Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla.
What stocks does Morningstar recommend? ›
Data is as of July 26, 2024.
- Ambev ABEV.
- Anheuser-Busch InBev BUD.
- Autodesk ADSK.
- Bristol-Myers Squibb BMY.
- Brown-Forman BF.B.
- Clorox CLX.
- JD.com JD.
- MarketAxess Holdings MKTX.
What are the best energy stocks to invest in 2023? ›
10 Best Performing Energy Stocks In 2023
- Gulfport Energy Corporation (NYSE:GPOR) Year To Date Share Price Gains: 87.53% ...
- Frontline plc (NYSE:FRO) Year To Date Share Price Gains: 91.6% ...
- Weatherford International plc (NASDAQ:WFRD) ...
- Cameco Corporation (NYSE:CCJ) ...
- Vista Energy, S.A.B. de C.V. (NYSE:VIST)
What is the best product to invest in 2023? ›
Popular Long-Term Investments for 2023
- Real Estate. Investing in real estate is a highly lucrative opportunity. ...
- Bond Funds. Similar to stock funds are bond funds. ...
- Real Estate Investment Trusts (REITs) ...
- Real Estate Crowdfunding. ...
- High-Yield Savings Account. ...
- Growth Stocks. ...
- Value Stocks.
Which stock market performed best in 2023? ›
U.S. indexes: For 2023, the S&P jumped 24.23%, the Dow gained 13.8% and the Nasdaq rocketed 43.42%. Bitcoin: Shrugging off the high-profile criminal cases against FTX and Binance, bitcoin surged around 152%.