2 FAANG Stocks to Buy in 2024 and 1 to Avoid
2 min read
The stock market has soared over the last decade. A $10,000 investment made in a market-tracking fund like the Vanguard S&P 500 ETF (NYSEMKT: VOO) at the start of 2014 would be worth $29,673 today after having grown at a compound annual rate of 11.6%, assuming that dividends were reinvested along the way.
But the handful of elite stocks known as the FAANG group has delivered even stronger returns. In the last decade, an equal-weighted and dividend-reinvested portfolio of these five stocks would have grown from $10,000 to $89,051. That’s a mind-blowing 24.7% compound annual growth rate. It was a bumpy ride, as the FAANG portfolio outperformed the S&P 500 (SNPINDEX: ^GSPC) tracker in five years and underperformed in the other five, but stellar results of 2015, 2020, and 2023 outweighed the weak 2022 period.
In case you’re not familiar with FAANG, I’m talking about these familiar companies:
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Meta Platforms (NASDAQ: META), formerly known as Facebook,
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Apple (NASDAQ: AAPL),
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Amazon (NASDAQ: AMZN),
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Netflix (NASDAQ: NFLX),
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Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), the parent company of Google.
The mildest 10-year gain among these top-shelf stocks was 400% for Alphabet. At the other end of the scale, Apple led the way with an 867% share price increase. The Cupertino-based iPhone maker is also the only dividend payer of the bunch; reinvesting those payouts would have lifted an investor’s total return on Apple stock to a cool 1,000% in 10 years.
But even the members of this exclusive club aren’t always indisputable buys. Right now, I see two excellent investment opportunities for 2024 in this bunch, but one that investors should avoid until further notice.
No-brainer FAANG buy No. 1: Alphabet
The Google parent took a hard fall in 2022. Both of its dual-class stock types fell by as much as 42% as the company was hamstrung by a rickety global economy and a weak digital advertising market. Overall, Alphabet’s stock has gone essentially nowhere over the past two years, posting a loss of 3%.
