The past two months have been a real wake-up call for investors. By that I mean investors have once again realized that "up" isn't the only direction the stock market can go.

According to data from analytics firm Yardeni Research, it took just 13 calendar days for both the iconic Dow Jones Industrial Average and broad-based S&P 500 to push back from their all-time highs to a 10% correction. It's the fastest such move in decades, and to say it caught Wall Street by surprise -- at least in its swiftness -- would be an understatement. 

A frustrated investor looking at losses on his computer monitors.

Image source: Getty Images.

Volatility in big tech names is picking up

Yet, following this first big drop, investors sought safety in big tech names, such as Amazon.com (NASDAQ:AMZN), and Facebook (NASDAQ:FB), and to a lesser extent Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), the parent company of Google and YouTube. Even though all three companies initially pushed lower in early February when the Dow and S&P 500 each registered their largest single-day point decline in history, they all rebounded strongly from their lows. In fact, Amazon.com forged ahead to hit new all-time highs not long after.

However, the tide has turned recently. Facebook has come under fire for its privacy practices; Amazon has drawn the ire of President Trump who doesn't believe it's paying enough in taxes and/or postage; and Google has trended lower with the overall market since its ad platforms are dependent on a strong economy (and a plunging stock market doesn't give off the perception of strength).

Given the rapid share price appreciation all three of these companies have experienced in recent years, a healthy or even significant pullback may be in order. Yet, truth be told, if we examine Amazon, Facebook, and Google based solely on their cash flow per share (CFPS), we'd see a trio of stocks that may actually be cheaper than they've ever been.

A magnifying glass hovering over a balance sheet.

Image source: Getty Images.

Amazon, Facebook, and Alphabet may soon be cheaper than ever

Why focus on CFPS and not profitability? While I do believe profitability tells an important story and is a crucial puzzle piece that investors should consider, for big tech companies CFPS represents a figure that encompasses the ability to reinvest, branch off into new projects, create new channels of revenue, and expand. Again, it's not a superior metric, but it's an important piece to a big puzzle for tech companies that often gets overlooked, in my view.

With this in mind, let's take a look at what Wall Street foresees in cash flow per share in the years to come for all three tech giants. 

Company  2017 2018 2019 2020 2021
Amazon $37.39 $60.18 $63.44 $85.64 $122.20
Facebook $8.19 $9.09 $11.34 N/A N/A
Alphabet  $53.52 $59.05 $71.82 $77.53 $107.20

Data source: Thomson Reuters. Table by author. N/A = not available. 2018-2021 are estimates. 

You'll note that the 2017 CFPS figure is an actual reported number by all three companies, while everything for 2018 and beyond represents the Wall Street consensus. Alphabet's CFPS is expected to roughly double between 2017 and 2021, while Amazon's CFPS may more than triple.

But where the "cheapness" of these big tech companies really shines through is when we compare their past, current, and future CFPS to the company's share price (P/CFPS). A lower number would represent a stock that is seemingly cheaper and more attractive from a valuation basis. With the aid of historical data from Morningstar, along with Wall Street's consensus estimates above for 2018 and beyond, here's what the price-to-cash flow per share history looks like for Amazon, Facebook, and Alphabet.

Year Amazon Facebook  Alphabet 
2013 37.01 39.16 N/A
2014 25.17 39.75 16.92
2015 32.56 40.38 20.18
2016 24.76 26.45 16.43
2017 35.32 24.26 20.28
2018 23.44 17.06 17.36
2019 22.23 13.68 14.27
2020 16.47 N/A 13.22
2021 11.54 N/A 9.56

Data source: Morningstar, Thomson Reuters. Table and calculations by author. N/A = not available. 2018-2021 are estimates. 

Comparatively, Amazon's five-year price-to-CFPS average is 29. However, by 2021, if Wall Street's estimates prove accurate, it would be valued at just 11.5 times its cash flow per share. A similar story would be seen with Alphabet and Facebook, which would see their P/CFPS dip well below their historic averages. Based on this metric alone, Amazon, Facebook and Alphabet look remarkably inexpensive!

But wait, CFPS isn't a perfect metric

Now, before you go betting the farm on these three tech giants, let's get one thing straight: cash flow per share isn't a perfect metric, at least as I've modeled it above.

A smirking businessman reading a financial newspaper.

Image source: Getty Images.

For example, the model above assumes a static stock price, which is unlikely to happen between now and say 2021. As the share price for these tech giants moves, the P/CFPS will need to be adjusted with it.

Further, Wall Street's CFPS estimates are exactly that: estimates. No analysts are perfect when it comes to accurately predicting profits, cash flow, or any particular metric, so investors should expect some fluidness to the figures presented above.

Finally, CFPS is a lagging rather than leading indicator. It'll tell you how a company performed last quarter or last year, but it's not going to teach you about the leading-edge catalysts that could impact a company. In other words, Facebook's privacy scandal and President Trump's target on Amazon's back could adversely impact these businesses between now and 2021. These intangibles are factors that investors have to consider beyond simply rigid metrics like cash flow per share.

Still, if Amazon, Facebook, and Alphabet can continue to grow at even half of their current rate, there could be tremendous upside left in these tech juggernauts.