Apple stock reached new highs in the past week, hitting a $3 trillion valuation. It’s the first company to ever garner such a valuation.
But, looking across the board, the rest of the FAANG space doesn’t look quite as strong. Three of those five components — Amazon (AMZN) – Get Amazon.com, Inc. Report, Netflix NFLX, and Meta (MVRS) – Get Meta Report — are more than 10% below their respective one-year high.
Based on the technicals, mega-cap tech stock Alphabet (GOOGL) – Get Alphabet Inc. Class A Report would seem like the most likely candidate for the next FAANG stock to hit new highs. It’s less than 4% off its all-time high, even though that level was hit back in mid-November.
Over on Real Money, contributor Bret Jensen says he “may have to quit being so ‘old school’ and dip my toes into this area on the next significant pullback in the market.” He’s talking about mega-caps like Apple and Alphabet. Read more about where he sees missed opportunities and get new trading strategies.
Alphabet has been consolidating for almost two full months. It was also the top-performing FAANG holding in 2021, dominating the other four holdings, and investors have plenty of reasons to expect an encore from the Google parent in 2022.
Consider the Mountain View, Calif., company’s dominance in internet advertising, its growth potential in cloud computing, and its exposure to intriguing long-term technological advances like autonomous vehicles, artificial intelligence, and drone delivery.
It’s also worth noting that Alphabet’s valuation is attractive relative to mega-cap peers. Its forward price-to-earnings multiple of 27 is significantly lower than that of Amazon and Microsoft (MSFT) – Get Microsoft Corporation Report.
Advertising revenue for the company was up 43% year-over-year in Q3 to $53.1 billion. That’s an area of the business that has a lot of momentum heading into the new year, especially for investors who think that the economy will continue to recover from the pandemic.
Plenty of tech stocks will undoubtedly play a big role in portfolios over the next year in 2022. Both large and small investors tend to put new money to work in January.
According to a recent study by McKinsey, more than four in five Americans used some form of digital payment in 2021. This statistic is a big reason to consider adding shares of PayPal (PYPL) – Get PayPal Holdings, Inc. Report this month, especially considering how far the stock has fallen from its 52-week highs.
Micron Technology (MU) – Get Micron Technology, Inc. Report stands out as another tech stock to consider buying in January thanks to pure momentum, an affordable valuation relative to peers, and plenty of long-term demand for its products.
Here’s a breakdown list of more technology and FAANG/MAMAA stocks to watch right now based on their performance over the past week:
Meta Platform’s Facebook (MVRS) – Get Meta Report led the tech-heavy Nasdaq gains in 2021. Facebook as the company has rebranded itself, has a massive audience. The company has “almost 3.6 billion people who actively use one or more of our services,” CEO Mark Zuckerberg said during the company’s most recent earnings call. The company ended 2021 with some exciting opportunities ahead and a bold plan to reshape its brand. Zuckerberg and company, however, do that under an increasing cloud of scrutiny.
“In 2022, the company will likely continue to be heavily scrutinized — perhaps more than other tech companies — and how it handles that may dictate what its long-term future looks like,” TheStreet’s Daniel Kline wrote. Facebook recently topped the distrust rankings when asked — “How much do you trust each of the following companies or services to responsibly handle your personal information and data on your Internet activity?” 72% of respondents said they don’t trust Facebook much at all.
TheStreet Quant Ratings rates Meta Platforms (formerly Facebook) as a Buy with a rating score of B+.
Apple became the first U.S. company to reach $3 trillion in market capitalization, as the computer giant briefly crossed the stunning milestone during intraday trading Monday. On the first day of trading in 2022, the company’s shares hit a record of $182.88 in mid-day trading. Apple reached $3 trillion roughly 500 days after it first passed the $2 trillion level. In August 2018, Apple became the first American company ever to be worth $1 trillion.
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Wedbush analyst Daniel Ives said that while the supply chain shortages have dominated Wall Street conversation around Apple in the holiday quarter, he instead is focused on the robust consumer demand story shaping up for iPhone 13 into 2022, according to the Fly. Ives maintained his outperform rating and a price target of $200 on the shares, with his bull case at $225.
TheStreet Quant Ratings rates Apple as a Buy with a rating score of A.
Amazon stock (AMZN) – Get Amazon.com, Inc. Report disappointed investors in 2021 with unimpressive gains of only around 2%. Some might be feeling uneasy about the lack of share price momentum as 2022 rolls in, especially after a year of supply chain disruptions and a slowdown in the growth pace of the e-commerce business. From a share price perspective, it is hard to tell for sure what the dismal 2021 performance might mean for Amazon stock in the new year, according to Amazon Maven Daniel Martins.
While malaise is often followed by a rally, the three-year gains in Amazon stock have been aligned with historical averages. Those waiting for a rebound in 2022 based on stock price action alone could be disappointed. However, the business fundamentals should not be ignored. E-commerce in 2022 will likely not recover to 2020 levels, but last year’s holiday season showed promise. Amazon is likely to perform better than its peers, as the company has been investing heavily in online retail infrastructure.
TheStreet Quant Ratings rates Amazon as a Buy with a rating score of B-.
As part of its pledge to ramp up cyber safety, Alphabet’s Google (GOOGL) – Get Alphabet Inc. Class A Report started off the new year by acquiring Israeli cybersecurity startup Siemplify. While neither company released the financial details of the deal, Israeli website Calcalist first reported that the Mountain View, Calif.-based tech giant paid $500 million for the Israeli company.
Founded by Amos Stern and Alon Cohen in 2015, Siemplify specializes in security orchestration, or integrating safety tools into different online products, and end-to-end encryption. As part of the deal, Stern and Cohen will continue to help the company as Google Cloud integrates its Security Orchestration, Automation and Response (SOAR) product into cloud services.
TheStreet Quant Ratings rates Alphabet as a Buy with a rating score of A.
Microsoft (MSFT) – Get Microsoft Corporation Report has led the Dow gains lately, rising more than 50%. Microsoft’s tablet the Surface Pro is the latest consumer gadget to get some not entirely welcome publicity. After the Tampa Bay Buccaneers recently lost 9-0 to the New Orleans Saints, quarterback Tom Brady threw a Surface Pro tablet over his shoulder. As you might expect, it quickly became a Twitter meme, according to Geek Wire, as some users called it the best throw of the entire game.
Microsoft is an official partner of the NFL, and coaches and players have been using it to go over plays since 2013. The Surface has an overall low share of the personal computing market at 3.4%, versus Apple’s iPad’s 64.4%, according to market analysis company Enlyft.
The Street Quant Ratings rates Microsoft as a Buy with a rating score of A+.
The Walt Disney Co. (DIS) – Get Walt Disney Company Report received approval from the United States Patent and Trademark Office on Dec. 28 to create its own virtual reality space at its theme parks. Disney said the patent will be used to create a virtual world at its brick and mortar venues such as inside a theme park or Disney property. The entertainment company already has over 300 patents that are used for its ride systems, live entertainment, interactive technology, special effects, fiber optics, and advanced audio systems.
The metaverse is gaining traction among tech companies such as Meta Platforms (formerly Facebook), Google, Apple, and Microsoft. Disney’s patent could allow the entertainment company to make a virtual world simulator throughout the park and potentially include “a handheld device configured for use by a user in the real-world venue and communicatively coupled to the computing platform.”
TheStreet Quant Ratings rates Disney as a Hold with a rating score of C.
In 2021, Netflix (NFLX) – Get Netflix, Inc. Report showed great results as its valuation grew by more than 15%. And it surpassed its competitors, such as Amazon and Disney, in several metrics. Shares jumped from $520 in January 2021 to over $600 in 2022, leaving many investors happy with the company’s results in such a difficult year. However, this strong valuation has some investors and analysts worried about the future of Netflix.
Looking at Netflix’s monthly returns can show investors an incredible opportunity. Since the company’s IPO, Netflix has posted an average return of 18% for the month of January. Investors can take advantage of this to see potential gains from the stock early in the year. Even after appreciating more than 15% in 2021, we believe that NFLX still has plenty of room to continue growing according to many analysts.
TheStreet Quant Ratings rates Netflix as a Buy with a rating score of B.