In this article, we will be taking a look at the 5 best FAANG stocks to buy now. To read our detailed analysis of these stocks and the technology sector, you can go directly to see the 11 Best FAANG Stocks To Buy Now.
5. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 128
Apple Inc. (NASDAQ:AAPL) is one of the Big Tech companies, most notably known for its production of the iPhone and the MacBook. The company is based in Cupertino, California.
An Overweight rating was reiterated on Apple Inc. (NASDAQ:AAPL) shares on October 3, by analyst Samik Chatterjee at JPMorgan.
Apple Inc.’s (NASDAQ:AAPL) revenue has grown by 11.63% year-over-year, and its EPS is expected to rise by 11.61% over the next three to five years. The company’s forward free cash flow per share growth rate stands at 14.7%.
Our hedge fund data shows 128 funds long Apple Inc. (NASDAQ:AAPL) in the second quarter. Their total stake value was $1.4 billion.
Distillate Capital Partners LLC, an investment management firm, mentioned Apple Inc. (NASDAQ:AAPL) in its second quarter 2022 investor letter. Here’s what the firm said:
“Apple was largest new purchase in the quarter, at a 2% weight. Apple underperformed the overall market last quarter,and given very minimal debt, this price weakness translated into a commensurate fall in its enterprise value. For stocks with higher debt levels, it takes a disproportionately bigger market cap drop to achieve the same valuation improvementand this is a key reason we avoid highly leveraged names where significant price weakness can be experienced during a revaluation process. Alongside this decline in EV for Apple, its estimated free cash flows have risen steadily throughout the year. This contrast between a falling enterprise value and rising free cash flow, which is highlighted in Figure 12, made the stock sufficiently better valued such that it entered the portfolio. While Apple’s valuation is now attractive enough to warrant inclusion in the portfolio, it still ranks in the bottom quartile of the portfolio’s holdings and so the stock’s initiating weight is capped at a 2%. This contrasts significantly with Apple’s near-7% position in the S&P 500 benchmark,and reflects both our preference to avoid too much concentration risk as well our goal of ensuring that the overall portfolio valuation is as attractive as possible while balancing characteristics of stability and low indebtedness.”
4. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 153
Alphabet Inc. (NASDAQ:GOOG) is a communication services company, also one of the five Big Tech companies, offering products like Google Services and the Android software. It is based in Mountain View, California.
Justin Post at Bank of America holds a Buy rating on shares of Alphabet Inc. (NASDAQ:GOOG) as of October 4. The analyst also placed a $114 price target on the stock.
Over the next three to five years, Alphabet Inc.’s (NASDAQ:GOOG) EPS is expected to grow by 14.9%. The company’s operating cash flow growth year-over-year stands at 17.49%.
There were 153 hedge funds long Alphabet Inc. (NASDAQ:GOOG) in the second quarter, and 160 funds long the stock in the previous quarter. Their total stake values were $22.2 billion, and $29.7 billion, respectively.
Lakehouse Capital, an investment management company, mentioned Alphabet Inc. (NASDAQ:GOOG) in its July 2022 investor letter. Here’s what the firm said:
“Alphabet Inc. (NASDAQ:GOOG) reported another strong quarterly result despite the tough macroeconomic conditions. Revenue increased by 13% as Search proved resilient, primarily led by strength in the travel and retail verticals. YouTube advertising growth was lighter and moderated due to a tough comparison period and a general softening in brand advertising spend. That said, YouTube’s user engagement and time spent still continues to grow which bodes well for future monetisation opportunities. Google Cloud outpaced the company’s overall growth with revenue increasing by 36% and while it has yet to show any signs of profitability, we remain supportive of Alphabet continuing to reinvest in its cloud business given the size of the market opportunity ahead. On the cost front, the company added another 10,000 employees during the quarter, but notably, the CFO mentioned that hiring will likely slow down over the next twelve months as the company focuses on greater operating efficiency. Overall, we’re pleased with how the company has performed and are confident that management will be able to control costs, if or when the economic environment becomes more challenging.”
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 184
Meta Platforms, Inc. (NASDAQ:META) is a communication services company, most notably known for its provision and operation of platforms like Facebook and Instagram. The company is based in Menlo Park, California.
A Buy rating was maintained on shares of Meta Platforms, Inc. (NASDAQ:META) on October 4, by analyst Justin Post at Bank of America. The analyst also placed a $196 price target on the stock.
Meta Platforms, Inc.’s (NASDAQ:META) year-over-year revenue growth stands at 13.95%, and its EPS is expected to rise by 5.34% over the next three to five years. The company’s operating cash flow growth stands at 18.45% year-over-year.
Meta Platforms, Inc. (NASDAQ:META) was found among the 13F holdings of 184 funds in the second quarter. Their total stake value was $18.2 billion.
Harding Loevner, an asset management company, mentioned Meta Platforms, Inc. (NASDAQ:META) in its second quarter 2022 investor letter. Here’s what the firm said:
“Any discussion of Q2 underperformance is incomplete without addressing two FAANG stocks. We do not share the market’s concerns about growth prospects at Facebook, Meta Platforms, Inc. (NASDAQ:META)’s core social media platform. Yes, growth is moderating as the business matures. There is also work to be done on technical workarounds to repair the damage to earnings growth from privacy changes implemented by Apple that impair Facebook’s ad targeting to iPhone users. But Meta’s digital advertising model still generates an extremely attractive rate of return on investment for the merchants it serves. Once its Apple workarounds are complete, we expect growth through market share gains and addressable market expansion to resume. Despite all the hyped new initiatives and skirmishes with rivals, Facebook remains an immensely free cash flow-generative business with huge advantages in putting its cash to work developing direct consumer relationships and monetizing them through targeted advertising. CEO Mark Zuckerberg has noted on multiple occasions how the company’s returns from its significant investments in AI have been even higher than it expected, in terms of driving higher revenue and lower costs. We view Meta shares as a bargain today, trading at 15 times earnings after over US$10 billion in annual expenditures on its Metaverse investments.”
2. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 252
Amazon.com, Inc. (NASDAQ:AMZN) is an internet and direct marketing retail company, known for its Amazon Web Services segment among more. It is based in Seattle, Washington.
A Buy rating was reiterated on shares of Amazon.com, Inc. (NASDAQ:AMZN) on October 3, by analyst Justin Post at Bank of America.
JPMorgan’s Doug Anmuth commented on October 4 that Amazon.com, Inc. (NASDAQ:AMZN) remains his top internet idea. Anmuth expects year-over-year revenue acceleration, margin expansion, and CAPEX moderation driving free cash flow inflection next year. Currently, Amazon.com, Inc.’s (NASDAQ:AMZN) year-over-year revenue growth rate stands at 9.61%.
Out of 895 hedge funds tracked in the second quarter, 252 funds were long Amazon.com, Inc. (NASDAQ:AMZN), with a total stake value of $30 billion. In comparison, there were 271 funds long the stock in the previous quarter, with a total stake value of $48 billion.
Diamond Hill Capital Management, an investment advisor, mentioned Amazon.com, Inc. (NASDAQ:AMZN) in its second quarter 2022 investor letter. Here’s what the firm said:
“Amazon.com, Inc. (NASDAQ:AMZN)’s shares underperformed as valuations of fast-growing companies continued to compress in Q2. Amazon’s growth investments over the past two years have pressured earnings as consumer demand has been weaker than anticipated. However, we believe the company will be able to grow into its infrastructure investments over time. These investments have obscured the magnitude of sustainable free cash flow as well as the attractive valuation of the business relative to peers.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 258
Microsoft Corporation (NASDAQ:MSFT) is an information technology company working to provide renowned products such as Microsoft Office and Skype. The company is based in Redmond, Washington.
Timothy Horan at Oppenheimer holds an Outperform rating on Microsoft Corporation (NASDAQ:MSFT) shares as of October 4.
The company’s revenue has grown by 17.96% year-over-year. Microsoft Corporation’s (NASDAQ:MSFT) EPS is expected to grow by 12.33% over the next three to five years, and its forward free cash flow per share growth rate stands at 13.46%.
Microsoft Corporation (NASDAQ:MSFT) had 258 hedge funds holding stakes in it in the second quarter. Their total stake value was $56 billion.
Diamond Hill Capital Management, an investment advisor, mentioned Microsoft Corporation (NASDAQ:MSFT) in its second quarter 2022 investor letter. Here’s what the firm said:
“The recent market environment has enabled us to initiate positions in some high-quality names that have sold off indiscriminately and are trading at prices we haven’t seen in quite some time. Microsoft Corporation (NASDAQ:MSFT) is one example. Microsoft’s stock price declined amid the broader selloff of technology companies. This presented an opportunity for us to purchase shares at an attractive discount to our estimate of the intrinsic value. We expect the business to continue generating strong revenue growth and benefiting from operating leverage. Microsoft’s cloud computing services business, Azure, is also generating robust growth, confirming its competitive positioning.”
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