There’s no getting around it – the FANMAG stocks (Facebook, Apple, Netflix, Microsoft, Amazon, and Google) have been absolutely crushing it.
Their positive momentum is clearly carrying financial markets to record highs today.
With a combined $7.8 trillion market cap, FANMAG now makes up nearly 30% of the entire S&P 500.
But good things like this typically don’t last forever…
What’s happening now reminds me of the famous Warren Buffett quote: “Be fearful when others are greedy.”
Now, I’m not saying to sell these companies if you already own them.
I actually think they all have room to run higher as long as the Fed continues providing liquidity to the markets.
But there is another set of stocks that I think could outperform FANMAG over the coming years.
I call them the BANG stocks.
Here’s why…
What Are the BANG Stocks?
I have been bearish on the dollar for the past couple of years.
The deteriorating fiscal situation here in the U.S. is the main reason for my bearishness.
It’s clear GDP is falling relative to debt created here in The States.
And there is a good correlation between the federal deficit and the dollar over the long run.
As more debt is created and more dollars are printed, the value each dollar falls.
Lately, the fiscal situation has been deteriorating even more rapidly – to the tune of about $5 trillion over the past 5 months – and it only looks like that number is going to increase for the foreseeable future.
As a result, the dollar could easily decline 30-40% as it did during the last major bear market from 2002 to 2011.
You may recall that that bear market for the dollar was also a great time to own precious metals and commodities.
Gold has already had a nice pop lately. And I predict we’re in the early stages of a bull of a bull run that will likely continue for the next several years.
If the dollar is to decline again in a major way as a result of the rapid debt accumulation met with money printing for the explicit purpose of stoking inflation, gold miners could prove be the best way to play it.
It’s very easy to say, “be greedy when others are fearful,” but it’s another thing entirely to actually do it.
Five years ago, investors who were greedy buying gold mining stocks have made out like absolute bandits.
Gold miners were widely feared at the time because the price of gold was poised to break down below $1,000.
As an asset class, gold was widely denounced and the mining stocks were absolutely despised.
Since then, however, courageous contrarians have been rewarded by the gold price rising 70% and the Gold Miners Index (GDX) rising 210%.
That’s nearly three times the rise in the S&P 500 Index’s 81% return over the same timeframe.
This outperformance has largely driven by the BANG stocks – Barrick Gold (NYSE: GOLD), Agnico Eagle Mines (NYSE: AEM), Newmont Mining (NYSE: NEM), and Goldcorp (recently acquired by Newmont).
Here’s Why I Love the BANG Stocks Now
As FANMAG is trading at valuations that look extreme relative to their history, the BANG stocks appear to be trading at a significant discount to their normal range over the past couple of decades.
When you look at the median enterprise value-to-revenues for the four stocks over the past 20 years, you can see that BANG is currently cheaper today than it was in the early 2000’s.
That was the end of the last major gold bear market – when the price of the precious metal was $1,000 per ounce cheaper than it is today.
Some have argued that these stocks may deserve to trade at lower valuations today because the gold price had lost a third of its value over the past several years – which in turn hurt their ability to generate higher profits.
However, it looks as if the profitability of these companies is significantly better today than it was at the base of the last major bear market for gold roughly 15 years ago.
Furthermore, the median 3-year revenue growth for this group has just turned positive again as it did at the start of the last major bull market for gold and the miners.
A normalization of the valuations for this group would yield a 50% gain for the stocks even without any upside in the gold price.
But if the precious metal is set to embark on another bull market, as I believe it is, the upside for these stocks could make FANMAG’s performance over the past few years look tame in comparison.
Hurry: Tiny $1 gold stock going vertical
A critical announcement will reveal the biggest gold mine in America.
Sending the $1 miner that owns it down a path for up to 100-fold gains.
Its real gold windfall has been kept hidden from the public. But that’s about to change for reasons you can see here.
You need to position yourself immediately.
Not only is the announcement coming…
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