2018 Bull/Bear Outlook for FAANG Stocks

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There’s no doubt that markets are in the midst of one of the greatest bull markets of our time. The Dow Jones Industrial Average (DJIA) and S&P 500 have risen more than 300% from their March 2009 panic-selling lows, and the gains in 2017 were up over 25% on the Dow and up more than 19% on the S&P 500. Some of the biggest winners in 2017 were the FAANG stocks, which have been a favorite of many investors and a staple for many portfolios. The question is where these big names go from here.

As we all know, FAANG stands for Facebook Inc. (NASDAQ: FB), Amazon.com Inc. (NASDAQ: AMZN), Apple Inc. (NASDAQ: AAPL), Netflix Inc. (NASDAQ: NFLX) and Alphabet Inc. (NASDAQ: GOOGL), formerly known as Google. In 2017 these stocks saw an average return of roughly 50%, and with 2018 off to a promising start they could gain even more as this rally continues.

24/7 Wall St. just came out with its annualized forecasting bias for the stock market in 2018. It looks like DJIA at 26,400 and at least 2,855 on the S&P 500 are now the baseline targets for this year.

It’s also worth pointing out that on the heels of tax reform, Credit Suisse is now targeting 3,000 and Oppenheimer is targeting 2,900 for the S&P 500 in 2018. At the end of 2017, the forward valuation for the S&P 500 Index was 18.5 times to 19.0 times expected earnings per share.

Keep in mind that while analysts may not be calling for much upside in these stocks currently, we can expect that these price targets will rise over time.

Facebook stock trades with a 28 forward price-to-earnings (P/E) multiple against 2018 expected earnings. It has a trailing P/E multiple of 36. Analysts have a consensus price target of $210.79 and are calling for Facebook to return 12% to investors in 2018.

Facebook has a 52-week trading range of $124.80 to $188.90 and a market cap of $546 billion. In terms of market cap, it ranks at number five in the S&P 500.

Amazon stock trades with a 156 forward P/E multiple against 2018 expected earnings. It has a trailing P/E multiple of roughly 320. Analysts are calling for Amazon to return about 4% to investors in 2018, based on its consensus price target of $1,300.87.

Amazon has a 52-week range of $799.50 to $1,259.33 and a market cap of $604 billion. In terms of market cap, it is ranked fourth in the S&P 500.

Apple stock trades with a 15 forward P/E multiple against 2018 expected earnings. Its trailing P/E multiple is roughly 19. Analysts expect Apple to return 6.90% to investors in 2018, or a total of roughly 8.35%, including its dividend yield of 1.45%.

Apple has a 52-week range of $118.21 to $177.20, and its market cap of $887 billion makes it the top S&P 500 stock by that measure.

Netflix stock trades with roughly a 93 forward P/E multiple against 2018 expected earnings. It has a trailing P/E multiple of 212. Analysts are looking for Netflix to return about 2% to investors in 2018, based on its consensus price target of $216.70.

Netflix’s 52-week range is $128.50 to $213.64 and its market cap is $92 billion. In terms of market cap, it is ranked 66th in the S&P 500.

Alphabet stock trades with a 26 forward P/E multiple against 2018 expected earnings. The trailing P/E multiple is nearly 37. Analysts are calling for Alphabet to more or less break even in 2018, based on its consensus price target of $1,100.86.

The 52-week range is $790.52 to $1,111.27, and Alphabet has a market cap of $769 billion. In terms of market cap, it is ranked number two out of the S&P 500.