Gordon Pape: Why only five of the Magnificent Seven stocks are buys

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Examining the investing cases for the mega tech giants

Last year, Bank of America analyst Michael Hartnett had the bright idea of rebranding the mega tech stocks as “The Magnificent Seven.” Why not? Great movie, memorable name. It seemed to fit, and it caught on.

The new Magnificent Seven includes Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla. As an acronym it would read AAAMMNT. Try pronouncing that! My reply was the same as it was in 2017 when I first recommended Amazon at over US$800 , with a p/e ratio of 171. “Yes, it’s expensive,” I wrote. “I happen to believe it will be even more pricy a year from now”. It was.People with long memories remember the dot-com bubble of 2000-2002. By the time it was over, in October 2002, Nasdaq had fallen 78 per cent. It didn’t recover its losses until 2015.

My Internet Wealth Builder newsletter rates Alphabet, Amazon, Apple, Microsoft, and Nvidia as buys. We are neutral on Meta Platforms - we need to get a clearer idea of the financial impact of the “headwinds” the company referred to in its latest earnings release.Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters.

 

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