Unlocking Wealth: Two FAANG Stocks to Watch Right Now
The path to growing your wealth through individual stocks isn’t as complex as some people suggest. With the remarkable performance of the FAANG stocks, it’s clear that investing in leading companies with steady revenue growth is key to building financial success.
The term FAANG symbolizes these prominent companies:
Over the past decade, the S&P 500 index has produced a 207% return (excluding dividends). Among the FAANG group, Apple was the least performing, yet it still achieved a remarkable 538% return. Leading the pack, Netflix saw a staggering rise of 1,400%.
These FAANG stocks remain widely recognized and respected today, just as they were a decade ago. While all of these stocks present investment opportunities, two stand out currently due to their strong business growth and promising future prospects.
1. Netflix
Despite the influx of new streaming services, Netflix maintains its status as a leader in digital entertainment. The latest earnings report from the company indicates strong future potential for investors.
In the third quarter, Netflix’s global membership surged by 14% year over year, reaching 282 million subscribers. Notably, the company has seen significant growth after implementing measures against password sharing, which has encouraged more users to sign up for memberships. Furthermore, its substantial content budget is supporting a steady stream of popular films and shows that attract a wide audience.
Netflix is now a major player among Hollywood studios that have existed for decades. This year at the prime-time Emmys, the company received 107 nominations and won 24 awards. Its latest releases, The Union and Rebel Ridge, garnered a remarkable 216 million views combined in the third quarter.
With a profit margin exceeding 20%, Netflix’s financial strength underpins its top position in streaming. The company’s content production expenses reached $12 billion in the first nine months of 2024, compared to $9 billion the previous year, signaling future subscriber growth.
Analysts forecast earnings to increase at an annual rate of 26% over the coming years, offering strong returns for Netflix investors.
2. Meta Platforms
Meta Platforms also stands out as a highly profitable giant in its field. With over 3.2 billion daily active users across its applications, the company is solidifying its market position. Facebook and Instagram rank among the top three social media platforms in the U.S., according to Statista.
Although Meta is scheduled to report third-quarter results on October 30, the momentum it has experienced this year is noteworthy. The recovery in the digital advertising market led to a remarkable 22% year-over-year revenue increase in the second quarter, following a 27% jump in the first quarter.
Management noted solid growth in the U.S. for WhatsApp, Facebook, Instagram, and Threads. The company’s efforts to engage with 18- to 29-year-olds appear to be gaining traction, which is a positive sign for future growth.
Meta is also integrating artificial intelligence (AI) features to enhance content recommendations and advertising tools. The company anticipates that advancements in AI will facilitate more relevant advertising for users and improve the overall user experience.
Despite competition from platforms like Snap and TikTok, Meta’s user base continues to grow significantly, maintaining a substantial share of the digital advertising market.
Over the last five years, the company’s net profit has tripled, reaching $51 billion. Analysts project earnings per share to grow at an annualized rate of more than 22% moving forward, which bodes well for Meta shareholders.
Is Now a Good Time to Invest $1,000 in Netflix?
If you’re contemplating purchasing stock in Netflix, weigh this information carefully:
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook, is a member of The Motley Fool’s board of directors. John Ballard has positions in Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, and Netflix. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
