Cramer advises against rotating out of FAANG stocks

Written by: Jayson Derrick
December 1, 2020
  • CNBC's Jim Cramer isn't in favor of investors rotating out of FAANG stocks.
  • FAANG stocks are "in charge of their own destiny."
  • Netflix, as an example, can make chess interesting.

The pending rollout of the vaccine to protect people against COVID-19 has many investors assuming this is the end of the FAANG era. But according to CNBC pundit Jim Cramer, the tech-dominated group is here. 

No rotation needed

Investors are strategizing if a move out of mega-tech and into small-cap or oil stocks is the right move heading into 2021. But the FAANG group, an acronym that includes Facebook, Inc. (NASDAQ: FB), Apple Inc (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN), and Google/ Alphabet Inc (NASDAQ: GOOG) all remain “the best in charge.”

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The “smart money” continue to argue otherwise, noting big tech stocks will take a back seat to small-cap stocks that are better positioned to grow in 2021. Granted, there are stocks that are a lot less attractive when the world returns to some sense of normalcy. But it certainly isn’t any of the FAANG names, Cramer said.

“These companies are living, breathing organisms,” he said. “They are so powerful that they are no longer connected to the prevailing economic whims. Instead, they are in charge of their own destiny.”

FAANG stocks will succeed regardless of who is running the White House and any vaccine timeline, according to Cramer.

What are pros saying about some of the other high flying tech stocks in 2020? Check out this earlier Invezz report on Zoom Video Communications Inc (NASDAQ: ZM).

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Facebook: Profit at any cost

Facebook’s operating motto over the years was the “pursuit of profit at any cost,” Cramer said. The company has gone on the offensive over the past year to change that narrative by marketing itself as a tool designed to help other small businesses better attract customers.

Amid the pandemic, Facebook offered small businesses a “lifeline,” Cramer said. This also happens to be an ideal line of defense if the company finds itself in the crosshairs of any lawmakers moving forward.

Apple: Two positive research notes today alone

Apple’s stock gained more than 2% on Monday as it was on the receiving end of two positive research notes on the same day. Loop Capital Markets and Morgan Stanley analysts both said in notes to clients they are seeing encouraging iPhone 12 sales data that leads them to believe the company is outperforming expectations.

Amazon: People will still shop online

The bullish case for Amazon is perhaps among the most straightforward out of all the FAANG stocks. Cramer said people will simply continue buying their stuff online from Amazon once the pandemic comes to an end.

Netflix: Making chess exciting

How great of a product does streaming video giant Netflix offer its customers? Well, the company produced a new series about chess called “The Queen’s Gambit” and made it exciting. The media giant took arguably the “most boring game in the world” and turned it into content people want to watch, Cramer said.

More than 60 million people watched “The Queen’s Gambit” and came at a time when some analysts are starting to dismiss Netflix’s days as a COVID safe haven as over.

Google: Advertising play

Google and its sister companies like YouTube are a pure advertising play, Cramer said. A vaccine will prompt travel and leisure companies to start running ads again.

“Alphabet has been a terrific COVID winner,” Cramer said. “But it’s also a vaccine winner.”