Investors who hold one or more of the "FANG" stocks shouldn't be worried about a slowing economy, according to Goldman Sachs' chief U.S. equity strategist David Kostin.
Speaking as a guest on CNBC's "Squawk on the Street" Wednesday, Kostin backed up his thesis that shares of Facebook Inc FB, Amazon.com, Inc. AMZN, Netflix, Inc. NFLX, and Google/ Alphabet Inc GOOG GOOGL are immune to an economic slowdown.
A "modest" growth environment implies that growth is still "relatively scarce," the strategist explained. As such, the growth stocks where "tech is a prominent area" are expected to continue performing well and even outperform.
"Basically you want to be in tech and particularly where there is secular growth," he said. "And there is a group of stocks where you have revenue growth that is double digit, and that's still relatively rare."
Meanwhile, the FANG stocks could boast a revenue growth profile of 10 to 20 percent but are trading at three to five times enterprise value to sales. This represents a "sweet spot" that investors should take advantage of, Kostin added.
Looking forward to the rest of 2017, Kostin is expecting a modest growth environment as notable catalysts for the economy, namely tax reform and infrastructure spending, will only be seen next year.
Finally, while FANG stocks would be ideal in a sluggish environment, investors may be better off buying value and cyclical stocks in an accelerating environment.
Related Link:
Cramer: The Market Is 'All FANG All The Time,' But It Shouldn't Be
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
