MCBM stocks are beating the market — and beating FANG, too


MCBM (pronouncedmac-bim…?) doesnt really have the ring to it that FANG does, but the stocks in the clunkier acronym have actually performed better.

Sure, Facebook
FB, -2.12%
Amazon
AMZN, +1.11%
, Netflix
NFLX, +3.64%
and Google
GOOGL, -0.09%
have beaten the market, but thats not all that surprising, since they are the leaders of the tech sector.


What about McDonalds
MCD, -0.33%
Caterpillar
CAT, -2.68%
Boeing
BA, -0.70%
and 3M
MMM, -1.01%
?


Turns out, as you can see by this chart from the Felder Report, MCBM stocks delivered stronger returns over the past two years than the FANGs:


But why?

You might rationally presume that, because the stock market is known as a discounting mechanism, this surge to unprecedented valuations reflects a surge in their respective businesses, says Jesse Felder. (Yes, I might.) In that case, you would presume wrong.


Felder shows how the average sales growth for these four has actually done just the opposite, yet the stocks keep moving higher. How can valuations scream to highs never seen before even as revenue growth stagnates or even goes negative? he asks.

The answer is twofold: stock buybacks and an epic reach for yield on the part of investors, he writes. Investors probably arent buying these stocks individually, Felder says, rather dividend-focused ETFs have been buying them up like crazy. He cites these stats on the number of ETFs counting the MCBMs among their top 15 holdings:


McDonalds: 32

Caterpillar: 25

Boeing: 83

3M: 44

Quote References FB -4.02 -2.12% AMZN +15.63 +1.11% NFLX +9.99 +3.64% GOOGL -1.08 -0.09% MCD -0.59 -0.33% CAT -4.48 -2.68% BA -2.40 -0.70% MMM -2.62 -1.01% Show all references
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Shawn Langlois is an editor and writer for MarketWatch in Los Angeles. Follow him on Twitter @slangwise.

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