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It was back in February 2013.
At the time, CNBC’s “Mad Money” host Jim Cramer introduced an acronym for stocks that represented the future. They had a dominant position in their market and strong momentum.
Those companies were Facebook (FB), Amazon (AMZN), Netflix (NFLX) and Google (GOOG) (GOOGL). He suggested that they had “the potential to really take a bite out of the bears.” As a result, he called them FANG stocks.
How did FANG stocks do since then? They returned +507% on average as of this writing, compared to a mere +71% for the S&P 500 (SPY). That’s +436% of alpha generated over seven years if you invested in a balanced basket of these four stocks.
FANG stocks – later re-branded as “FAANG” when Apple was added to the mix in 2017 – have remained outstanding performers, driving the Nasdaq 100 (QQQ) to a record-high recently.
While I own all FAANG stocks, I always wonder which companies truly represent the next wave of dominant technology companies that are likely to see their positions reinforced over the years and continue to outperform.
The same way FANG stocks were hidden in plain sight in 2013, I believe the next leading technology stocks are well known by most investors and already recognized by Wall Street for their superiority and the inherent underlying quality of their business.
The real challenge is not to find them. Anyone could have recognized the obvious superiority of Facebook, Amazon, Netflix and Google back in 2013. The real challenge is to buy them and hold them for many years.
This prompted me to offer a new acronym for five companies that represent the future of the digital economy. They are clearly dominant in their respective industries and likely to generate FANG-like returns in the decade ahead.
I call them the SMART stocks.
You may have heard of them and recognize that they have a lot of potential. But the chance that all of them are already in your portfolio is pretty thin. I bet that most investors will find them overvalued, too hot, or believe that they have “missed the boat” on them. Yet, I believe that investors who are looking for exposure to the highest quality businesses for the long-term would be hard pressed to find better places to put their money.
Let’s review what these best-of-breed companies are and why I believe the SMART stocks could make your portfolio look much smarter.
Source: App Economy Insights
S is for Square and the rise of digital banking
Square (SQ) is a company disrupting payment processing thanks to its two main ecosystems:
- Sellers-side with point of sale and managed payments.
- Consumer-side with Cash App.
I’ve been touting the potential for Cash App to drive Square’s valuation much higher in my previous article published in April. Shares have doubled in price since then (while the S&P rose only 10% in the meantime).
And it’s Cash App that has started…
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Read More: SMART Stocks Are The New FANG
