FANG Stocks Are Back in Vogue as Apple Gets Left Out of Rally

(Bloomberg) -- Remember the FANG trade? It’s back, thanks to a rally that’s excluded Apple Inc.

A slump in the shares of the iPhone maker that erased $380 billion in market value has helped revive interest in the the original gang of Facebook Inc., Amazon.com Inc., Netflix Inc. and Google parent Alphabet Inc., which have gained anywhere from 10.7 percent to 50 percent since Christmas Eve. All except Google have outperformed the S&P 500’s 11.3 percent advance. Apple has lagged behind, with a gain of just 5.5 percent over the period.

Apple’s rise to become the world’s most valuable company all but necessitated its inclusion in the group of stocks revered for their rapid growth, so before long the FANG acronym was often being replaced by “FAANG.” Now, with the Cupertino, California-based company languishing 33 percent below an October record, investor focus is shifting.

On Tuesday, Citigroup noted that the firm has buy ratings on all four FANG stocks for the first time in six years. On the same day Canaccord Genuity highlighted a strong outlook for the group.

Netflix, one of the best-performing large-cap tech stocks in 2018, has gained 50 percent since Dec. 24. Hits like the Sandra Bullock film "Bird Box" have helped fuel rising expectations for subscriber additions, which will be revealed on Thursday when the company reports fourth-quarter earnings. Amazon has rallied 25 percent in that period, Facebook 19 percent.

Netflix’s gains are an "indicator that investors are likely to return to these stocks quickly if underlying fundamentals are solid," Canaccord analyst Michael Graham said.

To contact the reporters on this story: Jeran Wittenstein in San Francisco at jwittenstei1@bloomberg.net;David Wilson in New York at dwilson@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Joanna Ossinger, Phil Serafino

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