The year 2020, so far, has been fabulous for the actions of FAAMG, which represents the top five best performing technology companies – Facebook, Amazon AMZN, Apple AAPL, Microsoft and Alphabet’s Google. Collectively, FAAMG represents 20.5% of the weight of the S&P 500 index.
The new acronym coined by Goldman Sachs is a modification on FAANG, in which Netflix NFLX was replaced by Microsoft due to its comparatively lower market capitalization. FAAMG can be used interchangeably with GAFAM.
With a cumulative gain (accumulated in the year) of 81.2%, Apple is currently the best performing stock among the FAAMGs, lost by 73.5% from Amazon. Microsoft, Facebook and Alphabet rose 43.5%, 30.1% and 28.4%, respectively, also surpassing the S&P 500, which rose 18.8% in the year.
The group benefited from the increased demand for e-commerce services and increased media consumption, as people are mostly confined to their homes due to blockades, on-site shelter guidelines and measures of social distance amid coronavirus pandemic. Since vaccination programs will take several months to reach most of the global population, these factors are likely to continue to benefit the FAAMG group in 2021 as well.
However, there are several actions that have outperformed FAAMG’s actions in the year so far and should continue with the momentum in the next year as well.
5 better bets than FAAMG for 2021
Here, we have chosen five fundamentally strong stocks that are prepared to offer good investment opportunities compared to FAAMG in 2021.
Tesla TSLA is at the top of our list, as sales of electric vehicles (EV) are expected to improve in the new year with better economy and comparatively lower interest rates. However, it’s not just next year, EV sales will, in fact, probably reach 26.95 million units in 2030 out of the 3.27 million units sold in 2019, marking a CAGR of 21.1%, according to a MarketsAndMarkets report.
In addition, according to a study by the Boston Consulting Group, EVs are expected to account for a third of the global automotive market by 2025 and more than 50% by 2030, easily outpacing sales of vehicles powered by internal combustion engines ( ICEs).
Tesla is ready to benefit from the robust EV perspective. The company has a pioneering advantage in the e-mobility space, with high-range vehicles, superior technology and advanced software. With the Model 3 sedan being its flagship vehicle, the automaker has established itself as a leader in the EV segment. The increase in Model Y production is driving even more revenue growth. In addition, Shanghai Gigafactory’s solid production levels bode well for its future growth.
Along with the increase in automotive revenues, the company’s energy generation and storage revenues are also increasing Tesla’s prospects. Notably, solar and storage deployments are expected to witness significant growth in the coming days, with the positive reception of Megapack and Powerwall products. A bright line of future products and aggressive expansion efforts bode for Tesla.
The EV manufacturer had already seen its shares jump an impressive 665.3% in the accumulated period of the year, easily surpassing the Zacks Auto Manufacturers – recovery of the domestic industry of 243.9%. What’s more, Tesla’s projected profit growth for the next year is still 58.9%. Zacks’ consensus estimate for 2021 earnings also rose 2% in the past 30 days to $ 3.56 per share. Tesla currently sports a Zacks Rank # 1 (strong buy). You can see the complete list of today’s Zacks # 1 Rank stocks here.
The Trade DeskZacks ‘TTD shares rose a whopping 273.8% YTD, exceeding Zacks’ Internet Services industry gain of 34.1%. The digital advertising company is benefiting from the push to buy programmatic ads. In addition, the emergence of digital content has boosted the use of this company’s stock in all forms of ConnectedTV (“CTV”). In addition, the recovery in demand for ads and the spending scenario is expected to fuel revenue.
Notably, spending on digital advertising surpassed the purchase of traditional media last year. In addition, citing reports from eMarketer, WNIP revealed that the digital ad market is estimated at $ 225 billion by 2024 in the United States alone, up from nearly $ 150 billion this year. This gives The Trade Desk a lot of room to expand, and marketers need to reach consumers beyond Google and Facebook.
The Trade Desk currently boasts a Zacks rating of 1. The Zacks consensus estimate for 2020 earnings is set at $ 4.44 per share, having been revised upwards to 5% in 30 days. For 2021, the consensus mark for earnings moved 2% to the north, to $ 4.58 per share in the same period.
NVIDIA Corporation NVDA is gaining from the pandemic-induced wave of homework and home learning. The graphics chip maker has witnessed a solid demand for GeForce GPUs for desktops and notebooks, which is generating gaming revenue. In addition, an increase in Hyperscale demand is a favorable factor for the company’s data center business.
In addition, the acquisition of Arm is expected to help NVIDIA deliver an end-to-end technology ecosystem in the data center, IoT, autonomous vehicles and mobile domains. The company is now well positioned to improve its inference technology, drivers and accelerators, using Arm’s robust architecture and chip designs.
NVIDIA’s shares soared 126.1% in the accumulated period of the year, exceeding the performance of Semiconductor – a general industry gain of 34.8%. Zacks’ consensus estimate for 2022 tax profits has been revised upward by 5 cents in the past 30 days, to $ 9.71 per share. The number indicates an increase of 18.7% in relation to the previous year.
Zscaler ZS is taking advantage of the growing demand for cyber security solutions due to the large number of data breaches. The increased demand for privileged access security in digital transformation and cloud migration strategies is a key growth factor.
In addition, the company’s Edge cloud for policy enforcement, multi-tenancy, proxy for SSL or TLS inspection and access to the zero trust network are robustly positioned for adoption amid a thriving remote work culture.
The strength of the Zacks Rank # 2 portfolio increases your competitive advantage and helps add users. In addition, a strong presence in vertical sectors, such as banking, insurance, health, public sector, pharmaceutical, telecommunications and education services, is another important catalyst.
Zacks’ consensus estimate for 2021 tax profit is set at 37 cents per share, having been revised upwards to 27.6% in 30 days. For fiscal year 2022, the consensus mark for profits moved 9.6% to the north, to 52 cents per share in the same period. Zscaler’s shares were up 344.7%, beating Zacks’ 34.2% return on the Internet services industry in the year so far.
Wayfair W shares appreciated 215.2% YTD, exceeding the 64.3% gain in the e-commerce industry.
The strengthening of the direct retail business in the United States and international regions has driven the growth of this company Zacks Rank # 2. In addition, an expanding active customer base has also been a favorable factor. In addition, the company is aggressively investing in international regions to strengthen its presence.
Zacks’ consensus estimate for current year earnings is set at $ 4.74 per share, having been revised upwards to 8.7% in 30 days. The consensus mark for next year’s earnings moved 4.6% to the north, to $ 2.28 per share during the same period.
Zacks Top 10 Stocks for 2021
In addition to the actions discussed above, would you like to know about our top 10 tickers for the entire year 2021?
These 10 are carefully handpicked from over 4,000 companies covered by Zacks Rank. They are our primary choices for buying and maintaining.
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