Meta Platforms, Inc. (META)

The world’s best advertising medium. If you look at the product online, they follow you around. They know what you like, who your friends are, what you are wearing. There are even some rumours they can listen in on your phone when you are talking. They and Google (GOOGL-Q) capture only a small amount of the world advertising market, so there is a long runway of growth. (Analysts’ price target is $200.)

There is no seasonal because there are not 20 years of data. It tends to move higher in September, dip into October and run higher into December.

Which FAANG stock would you choose? As a value investor, he wouldn’t touch any of them. It looks like they have peaked as money is moving out of them temporarily, into more cyclical stocks, financials and even energy stocks for now. Because of that, he wouldn’t own any right now. If he had to pick one, this one seems to really dominate what they do.

This has a lot of runway in front of it. It has appreciated very quickly from a price standpoint, but valuation metrics have become more compelling. For that to happen, it means the fundamentals have risen at a faster pace than the price. They’ve made a very good inroad into artificial intelligence. Their product, Oculus is going to be very important for them. Instagram is doing extremely well.

$1,000 in 5-10 years?An ROE over the long-term should also predict the movement of the stock price. For example, if a company has an ROE of 20%, they are increasing the value of the shareholder equity by 20% a year. 20% compounded over a ten-year period actually leads to a fivefold increase in the equity which, theoretically, should also lead to a fivefold increase in the stock price. If you were to multiply the current stock price of this by 5, that gets you relatively close to $1000. However, he doesn’t think it gets to $1000 over the next 5 years, but if they are able to achieve those ROE’s that they have in the past, it wouldn’t shock him. Thinks their runway for growth is long and very good.

(A Top Pick April 6/17. Up 22%.) They are doing everything right. They are still only 5% of global ads spending. Phenomenal ad growth and have a long way to go. Had a great run, but definitely have more avenues to continue to grow on.

(Top Pick Sep 19/16, Up 34%) The price per ad they got was up 24% even if the growth rate was down to 19%. It has run up a lot and is probably due for a pull back. It is a near term hold and long term buy.

He loves this. It had an amazing quarter. An amazing growth story. The moat of the network affect is unbelievable. It is everywhere. It breaks all languages and all countries. Everybody uses it. There is accelerating growth in terms of new users. Trading at 27X forward earnings, which is actually not insane. If you back out all the cash that it has and the cash it is going to generate, you can get to a more reasonable, comfortable level. If there is a pullback, he would look to buy more.

It is one of the FANG stocks and is a powerhouse in terms of growth stocks. It is not insanely valued. It is top 25% in momentum and valuation. It has a 22% ROE, 38 times trailing earnings. They are a leader in pretty much everything they do. They beat on the last quarter. It is pretty reasonable here.

All of the big 5 tech stocks have continued to surprise analysts and critics by running up in value. It is an incomprehensible number of users on Facebook. They have proven they can monetize the mobile device. 87% of their revenue now comes from mobile advertising. In technology it has become ‘winner take all’. GOOGL-Q won search, AMZN-Q won online retailing and FB-Q won social networking.

NFLX-Q vs. FB-Q. Two of the fang names have taken us thus far. He would prefer Netflix. It gapped up to $160. FB-Q is bumping its head on rising trend line resistance. He expects a retracement here. He prefers NTFLX-Q.

Facebook (FB-Q) or Netflix (NFLX-Q)? These are both dynamite companies with great opportunities in front of them. If he had to choose one over the other, he would choose this one. He considered using it as a Top Pick today. Looking out over the next year, Facebook has so many different engines that are running, and almost none of them are dependent on another company. Netflix has huge growth in subscribers globally, but is still somewhat dependent on 2^nd or 3^rd party contracts.

He could never understand why people pay an increasing amount of money for a desktop or an iPhone advert when they are not going to ultimately buy the product. The stock has done fabulously well and people have made a lot of money, but he doesn’t understand the business model beyond it being just a great advertising story.

The good thing is that globally, people are using it. For her, it goes back to “these are consumers”, and what happens when the next thing comes around, or if people decide they want to do other things instead of sitting in front of their screens. She has seen over and over again how quickly trends can shift. Too unpredictable for her.

They are destroying the competition, because they are so big. Have 2 billion users and are really everywhere. The data they collect is incredibly valuable. Leveraging video content and advertising is the next step. Trading at 24X earnings, which is great considering that it is growing at 40% a year. (Analysts’ price target is $190.)