This year has proven to be the year of FANG (Facebook (FB), Amazon (AMZN), Netflix (NFLX), Google (GOOG)), but will those stocks’ momentum carry into 2016? This has been a topic of heated debate, but at least one firm is arguing that next year the big internet trades will follow a new acronym: BAGEL, which stands for Alibaba (BABA), Amazon, Google, Expedia (EXPE), and LinkedIn (LNKD).
Internet stocks broadly outperform
RBC Capital Markets noted that the Internet sector performed very well this year, although large cap stocks in the sector posted incredible performance. The FANG group posted an average increase of 81% in 2015, which means the valuations of all of the stocks aren’t nearly as compelling as they were a year ago. And FANG weren’t the only large cap Internet stock to smash the rest of the market this year. In all, RBC reports that 11 large cap stocks in the sector outperformed the market.
At the opposite end, however, we have small cap Internet stocks, which underperformed the market broadly. Among these stocks are AOL, King Digital (KING), and Zulily. Six merger and acquisition deal among small cap Internet stocks provided nearly all of the outperformance for the small cap sector, and ten of the small cap Internet stocks fell by more than 20% this year.
Facebook, Amazon, Netflix, Google: a.k.a. FANG
In 2015, Facebook climbed 31%, Amazon was up 106%, Netflix skyrocketed by 144%, and Google parent company Alphabet rose 41%. Looking at the broader collection of large cap Internet stocks, the average stock returned 21%, while the average small cap Internet stocks declined 11%. But not all large cap Internet stocks were strong performers this year. Twitter (TWTR), Yahoo (YHOO), Alibaba and Zillow (Z) didn’t have such great years. The biggest underperformers among large cap Internet stocks were Yahoo, Twitter and Alibaba, with Twitter repeating its pathetic stock price performance from 2014 this year.
