FANG stocks have been exploding lately, even as the stock market as a whole has struggled to recoup losses from earlier in the year.
FANG, an acronym coined years ago by TheStreet's Jim Cramer, encompasses Facebook Inc. (FB - Get Report) , Amazon.com Inc. (AMZN - Get Report) , Netflix Inc. (NFLX - Get Report) and Alphabet Inc. (GOOGL - Get Report) . While those stocks have performed with impressive strength in recent history, tech sector gains aren't limited to just FANG.
The New York Stock Exchange's FANG+ Index includes the aforementioned FANG names, plus other heavy hitters Apple Inc. (AAPL - Get Report) , Twitter Inc. (TWTR - Get Report) , Baidu Inc. (BIDU - Get Report) , Nvidia Corp. (NVDA - Get Report) and Tesla Inc. (TSLA - Get Report) . That index has climbed 23% so far this year, earning the group of stocks an annualized return of 67% since early last year.
The group has even now outpaced the gains of the tech-heavy Nasdaq Composite benchmark index in its final two years of the dot-com bubble, according to Bloomberg data. During the last two years of that rally, the Nasdaq gained 66%.
The NYSE FANG+ index has also outperformed the broader market in current market conditions. Even as the Dow, the S&P 500, the Nasdaq and the Russell 2000 fell on Wednesday, the tech index was marked 1% higher by the market close.
Wall Street analysts expect earnings in the group to advance 22% over the next three to five years, Bloomberg data showed. That would be double the consensus expectation for the broader S&P 500.
Valuations have also soared. The companies in the FANG+ Index trade at almost three times the average of the market at large on a valuation basis.
Bubble or just betting on strong fundamentals? We'll find out shortly, for sure.
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