What Are the Next FANG Stocks? Technology stocks have been hot since the 1990s, and although the dotcom bubble crashed over 20 years ago, some of today’s biggest stocks rose from those ashes.
Facebook, Apple, Amazon, Netflix, and Google (owned by Alphabet) are collectively known as the FAANG stocks. While they’re not traded anywhere exclusively as an ETF, they’re cornerstones of a variety of indices and the market as a whole.
FAANG stocks, or FANG as some called them, hold up everything from the S&P 500 and Dow Jones Industrial Average to smaller indices.
But these companies are no longer the fast-rising stars they were in the 2000s. They’re seasoned companies at the top of their games with massive market caps that were inflated amid the coronavirus pandemic. FAANG stocks are relatively safe places to invest your money, but the massive gains are likely already gone. So, what are the next FAANG stocks?
Let’s start by exploring the originals.
What Are FAANG Stocks?
Although not an official index, FAANG stocks are known for providing a healthy return on their investment.
Initially FANG, Apple was eventually lumped in with the rest because of similarly focused offerings in the smartphone era.
These five stocks have collectively outperformed the S&P 500 and Nasdaq indices.
Facebook (NASDAQ: FB) Has 2.7 Billion Users
Facebook, Inc. is more than its 2.7 billion users-strong namesake platform; it also owns WhatsApp and Instagram, two of its closest competitors.
Together, these apps are cornerstones to our online lives, expanding in ways America Online wasn’t able into identification and advertising services.
And its Portal and Oculus VR devices expands its ecosystem into consumer electronics for our homes. It’s clear the company plans to stay, long outlasting MySpace, the social networking giant it dethroned, while taking on (or buying out) all new competitors.
Amazon (NASDAQ: AMZN) Has 150M Prime Members
Over 150 million people have Amazon Prime, and that’s just the beginning of this giant enterprise’s revenue streams.
This mega conglomerate has its hands in everything from ecommerce and cloud storage to device manufacturing, content creation, publisher, and more.
Founder and CEO Jeff Bezos became the richest man in the world in 2020 by a large margin, and this online bookstore disrupted everything in the 2000s. Amazon.com, Inc. is the new gold standard in business.
Apple (NASDAQ: AAPL) Is A Cash Generating Machine
Apple Inc. had ups and downs in the 20th Century, but it revolutionized the way we use computers. From the Home PC to MP3 players, the smartphone, tablets, iTunes, and the App Store, Apple built one of the biggest consumer technology ecosystems on the planet.
It’s so powerful that Fortnite publisher Epic Games filed an anti-trust lawsuit on behalf of app and game developers.
Its expansion into streaming TV and smart home devices is expanding the company anyway, as it generates more profits than even Amazon of its revenue.
Netflix (NASDAQ: NFLX) Still Sends 2M DVDs Monthly
Netflix Inc was the first successful streaming service (first a mail-in service, which – believe it or not – still mails DVDs to over 2 million people every month!) effectively shut down Blockbuster and any other video rental competitors in the process.
The company then took it a step further by creating its own production studio with a budget approaching $20 billion a year.
Steady price increases, along with increased pressure from competition like Hulu, Prime Video, Apple TV+, Disney+, Peacock, and more cord-cutting alternatives. The target on its back is only getting bigger.
Alphabet (NASDAQ: GOOG) Has 85% Of All Search Traffic
Google was the best search engine around in the 2000s, and it wasn’t long before it became the top player, still holding over 85 percent of all search traffic.
It soon became clear that advertising was Google’s revenue stream, and the company used its profits to revolutionize the workplace, and form a parent company in Alphabet, Inc.
The company proceeded to pour money into R&D and acquisitions of companies like YouTube, Motorola, DoubleClick, Waze, and DeepMind. Now, it’s the premiere technology company in Silicon Valley.
These companies are now the giants that everybody knows, and while they’re still safe places to invest your money, you’re not going to become rich off it. Bigger gains can be made by finding the next FAANG stocks.
What Are the Next FANG Stocks?
It’s easy to see today why FAANG stocks are lumped together, but they weren’t always bloated whales.
Each of these companies started small and created a niche in what seemed like a crowded tech market. Many survived the dotcom burst, and the rest were started in the aftermath.
When other companies were found to be overvalued, the people, products, and processes in place and these companies allowed them to scale.
Because of this, they outperformed the general market and the S&P 500 index they are now cornerstones of. Their growth continued through the 2020s and got even stronger during the coronavirus pandemic.
These are the criteria you should look for when picking the next FAANG stocks, and we have our own picks as well: VAPIN stocks.
VAPIN Stock Analysis: The Next FAANG
Vaping had its own Renaissance in the 2010s, but the VAPIN index has nothing to do with it. Instead, it represents five companies that are at the right place at the right time.
They have the potential to grow into massive conglomerates and create new revenue streams to grow while becoming part of our everyday lives.
Vertex Pharmaceuticals Is A Bet On An Aging Population
Vertex (NASDAQ:VRTX) is an innovative, Boston-based biopharmaceutical company on the forefront of the war against viral infections, cancers, and autoimmune disorders.
Its drug pipeline of FDA-approved treatments includes medications for cystic fibrosis, sickle cell disease, and more is in the works. It collaborated with Moderna on mRNA research, and has a network of partnerships across the U.S. and Europe to increase global distribution.
The company outperformed the S&P 500 in the 2010s, and its well-suited for the health-focused environment of the 2020s. As our population ages, companies like Vertex should only become more valuable, poising it for Facebook-like growth potential.
Autodesk (NASDAQ:ADSK) creates some of the best professional software for 3D design, engineering, construction, and more.
From AutoCAD, SketchBook, and Maya to optics used in Tesla’s electric cars, few things in the modern world were built without Autodesk software, making it as foundational as Apple, Google, or Microsoft.
This suited the company well when companies big and small rushed to enable remote virtual work in 2020.
It’s a component of the S&P 500, which is something even Tesla hasn’t been able to pull off yet, and the company spent the bulk of the 2010s spending on mergers and acquisitions. The company’s annual revenue is over $3 billion, and its total equity is quickly pulling out of the red.
PayPal (NASDAQ:PYPL) disrupted the banking industry after being acquired by eBay and then spun off again into its own fintech company.
Now its aggressive expansion is taking the banks head on, and it continues revenue growth while banks struggle in 2020 because it doesn’t have the same exposures in real estate, investments, and more.
PayPal’s revenue in the second quarter of 2020 was $5.26 billion, versus $4.3 billion in Q2 2019.
Now that PayPal’s contract with eBay is expired, all eyes are on whether the payment giant will finally partner with Amazon, a will they/wont they relationship that’s been dragging on throughout the 2000s.
If it does that and gains FDIC insurance to hold customer deposits (finally giving routing numbers for direct deposit) it could become the first “too big to fail” bank of the digital age.
While you may not have heard of the company, its $3.5 billion revenue in 2019 and is only growing, thanks to the push to a virtual work environment.
Competitors like Oracle and SAP are also large, but ServiceNow is about half their size in 2020 and poised to continue expanding as a Platform-as-a-Service (PaaS) provider for other businesses. Think of them as virtual landlords.
Intuitive Surgical, Inc.
Intuitive Surgical (NASDAQ:ISRG) is helping surgeons provide better quality care using robotics to perform minimally invasive surgery.
This helps decrease the risks of infection and other problems that can occur on the operating table, and it has the backing of everyone from the National Institutes of Health to DARPA and the FDA.
Revenues have grown over the past decade, and this S&P 500 component outperformed the rest of the index over the past decade. As the world moves toward virtual healthcare, Intuitive Surgical could be standing at the epicenter of a robotics revolution.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.