It's been two years since I took the original FANG stocks -- Facebook (META 2.16%), Amazon.com (AMZN 2.55%), Netflix (NFLX 1.53%), and Google parent Alphabet (GOOG 3.28%) (GOOGL 3.13%) -- under the knife. I figured that Netflix and Amazon were undeniably rock stars, but I had my doubts about the growth prospects of the other two components.
I figured I'd keep the middle children of the FANG acronym, while adding Microsoft (MSFT 3.37%) and Apple (AAPL 3.08%) as the new bookend replacements. From that, MANA was born. How did it hold up? Now that we're two years since the original Oct. 9, 2018, surgery, it's a fair point to score the efficacy of MANA as an investment strategy.
An acronym by any other letter
It was easy to be down on Facebook and Alphabet at the time. Facebook was being dogged by privacy concerns and growth concerns, trading at nearly its 52-week low. Alphabet was faring better, but the future of paid search was hazy.
Both stocks have fared well off depressed lows. Facebook has risen 67.5%. Alphabet hasn't been as solid, but it still managed to climb 31.9% over the past two years. Since the stellar performance out of Netflix and Amazon -- up 51.7% and 75.7%, respectively -- apply to both FANG and MANA, we can leave those out for now.
Let's size up Apple and Microsoft. For starters I should point out that I was fashionably early in inducting Apple. As the world's most valuable company by market cap now, the investing community would eventually come around to seeing things my way. FANG is now widely reconstructed as FAANG, with Apple in the middle.
Apple's growth hasn't been spectacular. Its compound annual growth rate over the past two years clocks in at a yawn-worthy 3.6%. However, Apple's transition into a high-margin services company has been the real draw for investors here. We'll let the iPhone 12 it introduces on Tuesday shift top-line growth into a new gear. The stock has more than doubled in the past two years, up 111.5% since my MANA launch party.
Microsoft has also been a strong investment. After a few years of languishing and flopping on everything from MP3 players to smartphones, it has gotten into a good groove. Mr. Softy has posted top-line growth in the teens for three straight fiscal years. The stock has nearly doubled over the past two years, up 97.5% in that time.
I think we know how the FANG vs. MANA fight turned out. Microsoft and Apple have each outperformed all four of the FANG components, so there's only one way for this competition to end.
- FANG is up 56.7%.
- MANA is up 84.1%.
MANA was outperforming FANG at the time I introduced the fantastic four, but it's easy to backtest any theory. The real test in any statement is how well it holds up in the future. Two years in, we are seeing MANA continue to dominate FANG and also the better-performing FAANG. MANA -- unlike the original FANG -- offers dividends and exposure to what is now the three most valuable companies by market cap. MANA still works.