First-quarter earnings season is in full swing and today I am dropping in to share an update on Meta Platforms (META) and three other big tech leaders, Amazon (AMZN), Apple (AAPL) and Alphabet (GOOG).
First the bad news.
Meta massively disappointed the Street yesterday after reporting Q4 results that fell short of expectations. Guidance was also below expectations. When you add the two together, Meta shares had their biggest one day drop ever, falling 26%. Here are some more details from CNBC.
Shares of Facebook parent Meta closed down more than 26% Thursday after the company forecasted weaker-than-expected revenue growth in the next quarter. It also said it’s taking a big hit from Apple’s privacy changes, and showed the first quarterly decline in daily active users on record.
The stock finished with its biggest one-day drop ever, ahead of the 19% plummet it saw in July 2018. Thursday’s drop shaved more than $230 billion from its market cap, bringing it to about $660 billion.
Meta is a widely held stock among my clients and I’ve been optimistic on it for years. However,moving forward I am going to be shifting out of Meta for two reasons.
- Meta is still a very good company but in the short run I expect shares to remain volatile as the bulls and bears duke it out.
- In the long run I believe better opportunities have emerged.
I will be re allocating from Meta and into three targets.
- Index funds
- Food stocks
- Energy stocks
Despite the removal of Meta, the growth portfolios will retain an outsized allocation to big tech through Amazon, Apple and Alphabet.
Which bring me to the next section.
Outside of Meta, big tech has been on fire, reporting excellent fourth-quarter earnings that have given respective shares a big boost.
- Apple beat expectations with record revenue that sent shares up 10% in one day.
- Alphabet beat expectations, shares jumped 9% and the company announced a 20-for-1 stock split.
- Amazon crushed expectations and shares jumped 18% in after hours.
This is all very good news for big tech. In the short run it gave shares a big boost and in the long run the good news should support shares for the next few months. These three stocks will continue to be core holdings in growth portfolios and big tech remains an important investment theme.
But before I sign off I want to jump back into food and energy stocks. Here’s an important message that I want all my clients to hear.
It’s Time to Get Bullish on Food and Energy Stocks!
I think we are in the early stages of a super rally in commodities and commodity stocks that I expect to last for years. By commodities I am talking about agricultural goods such as corn, beans and wheat and on the energy side I am talking about crude and natural gas. I think food and energy prices are going to rise sharply in the next five years and I expect the companies that control these resources to do very well.
Investors have been very focused on tech stocks for the last ten years and that has been an awesome place to invest because the returns have been spectacular. And moving forward I think big tech will continue to do well. But the days of Apple going up 100% every year for 10 years are probably over.
This imbalance is triggering a shift, where capital rotates out of tech stocks that have been up a lot and into super undervalued food and energy stocks that are barely up in the last decade.
I want my clients to be aware of this trend – its an important and powerful trend and I have been investing accordingly since last summer. And moving forward this will remain a key theme for growth portfolios.
I will definitely be providing more updates but in the meantime check out my report from last summer.
I’ll be back next week, have a great day!
Disclaimer: This report is for entertainment purposes only. Every investor should consult with an investment advisor before making investment decisions. The Vodicka Group, Inc. is not a broker/dealer. We do not receive compensation for mentioning stocks. At various times, the clients, publishers and employees of Vodicka Group, Inc., may buy or sell the securities discussed for purposes of investment or trading.
Author Michael Vodicka owns shares of Alphabet (GOOG), Apple (AAPL), Amazon (AMZN).