Just on that topic - of the FANGs (Facebook, Amazon, Netflix & Google), or FAANGs (with Apple added), or FAAAN stocks - if you use Google's actual company name, which is Alphabet...
I saw this in a recent TGG report (Templeton Global Growth LIC Investment Management Report, released as an ASX announcement for TGG on August 9th - 5 days ago):
That shows that almost half of the S&P500's 16.2% gain over the 12 months to July 31st was due to just 9 stocks, referred to here as the Nifty Nine. Without those nine companies, the S&P500 would have returned only 8.5%.
Another interesting thing is that the two companies that screen as the most expensive (on P/E or P/B ratios) are clearly Amazon (PE=106.2, PB=20.5) and Netflix (PE=125.3, PB=28.3), however those two have also provided the best returns to shareholders over the past 12 months, with their share prices rising +79.9% and +85.8% respectively.
It's been a hard year for value investors, and a pretty good year again for growth stocks. I'm still mostly in the value camp. Our time will come. Amazon is probably in a class of their own, and FB & Apple don't look overly stretched in relation to their continued growth trajectory. Even Alphabet (Google) looks reasonably priced for their future growth. Some of those others do look to me like they've gotten ahead of themselves, but I'm no expert in tech companies, so my opinion here is pretty meaningless. The risk, clearly, is that in a bear market, or just a decent correction (or a crash), companies that have a lot of future growth priced in already (very high PE companies) are going to be hit particularly hard. In that scenario, the S&P looks relatively vulnerable, particularly as their performance is so reliant on such a small number of companies, many of whom look quite expensive right now.
Aurelia Metals (AMI) is rapidly becoming a top mineral explorer and developer, still very undervalued and just starting to get on the radar screen of big funds. Great chart too, just keeps trending higher. Latest 68.5c.
G8 Education (GEM) is a great short :) A childcare rollup in serious decline, with a good chance of plummeting on their next report due 27th August.
Here are my ideas, for what they're worth:
Positive Market Reaction to August Report: RCR Tomlinson (RCR)
Stocks to end FY19 higher than where they are right now (today being 29th July 2018):
RCR, OSL, DCN, NST, SXY, IGO, CLQ, HRR, MAH.
Context:
RCR, as long as Dr. Dalgleish is still running the company (hasn't left to turn around another company).
OSL, as long as they achieve their CE Marking for their OncoSil device/procedure for pancreatic cancer in the EU (which I expect to occur within the next couple of months from now).
DCN and NST are gold stocks. If the price of gold tanks, so will their share prices. NST (Northern Star) is the best run established Australian-listed gold producer but are expensive at current levels. I expect they will rise over 12 months regardless of that. DCN (Dacian Gold) is one of the up-and-comers, who have just started producing. They will gain prominence over the next 11 months (to June 30th) and will enjoy positive market re-ratings as they increase production and find more gold via their aggresive exploration program (in my humble opinion).
SXY is an energy play, which should do well as they move from a couple of bad years into a couple of very good years. Senex is very well positioned to capitalise from good domestic east-coast gas prices.
IGO (Independence Group) is a diversified miner (nickel, copper, gold, cobalt, zinc) who should do well as long as we don't get a global recession.
CLQ (Clean TeQ) is the most speculative, and could still go to zero. However, I think the odds are they could easily double or more from here, and possibly triple if they get the funding sorted and actually start construction of their Sunrise Nickel/Cobalt/Scandium mine in NSW. Their water business is a slow burner, but could also provide additional upside. They are either going to be a lot higher or a lot lower than current levels in 12 months, in my opinion.
HRR (Heron Resources) will be producing zinc and copper at Woodlawn (between Canberra and Goulburn in NSW) early in 2019 (or late this year). I'm bullish on zinc. The trajectory of Dr Copper will increase or decrease in line with global growth, so I'm OK with copper, but it will depend on what Trump does, what China does, and if we get a global recession. As long as global growth is at least as good then as it is now, Heron would have to stuff things up in a big way to be trading at current levels or lower in 11 months' time.
Macmahon (MAH) is a mining services company that is Forager's largest holding in their Australian Shares Fund (FOR). Steve Johnson still sees upside in MAH, and I do too. MAH's largest contract is in Indonesia and they have a profit sharing arrangement where they can't lose money, but they could make no profit (only cover their costs) if they underperform. The upside is pretty good however if they can hit their targets. Their new CEO, Mick Finnegan, has loads of experience in Indonesia and PNG and knows the main players and the industry very well. The Indonesian company who own the mine (MAH's largest mining services contract) also own 44.3% of MAH, so it's in everybody's interests that MAH do well there. MAH also have a number of good mining contracts in Australia, including the long-life, high-grade & low-cost Tropicana Gold Mine that is 70% owned (and operated) by AngloGold Ashanti (AGG) and 30% owned by IGO. MAH have had a couple of problematic contracts in recent years, the worst being the Telfer contract for Newcrest (NCM). That is set to return to profit for MAH this half. MAH should continue to be positively re-rated by the market.
I'm less bullish on overpriced growth stocks, especially tech-related growth stocks, because I think that those trading at very high multiples will likely fall the hardest in a market correction or crash, especially those exposed to slowing global growth, if global growth slows. Every day that passes brings us closer to the next correction or crash. This bull market is very long in the tooth now, especially in the USA.
Disclosure: I hold RCR, OSL, DCN, NST, SXY, IGO, CLQ, HRR, MAH.