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Drew Barrymore reprises her role as real estate agent turned bloodthirsty zombie in the second season of Netflix Inc.'s Santa Clarita Diet. New episodes of the dark comedy promise toothsome fare for fans of the show this month.

While waiting, investors can think about sinking their teeth into Netflix and the other FAANG stocks. The acronym is admittedly a little past its best-before date and encompasses Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX) and Google, now Alphabet (GOOGL).

They're all high-tech monsters of the market with transformative businesses run by bright and able people. Unfortunately, most are trading at valuations that are similarly gargantuan. But one clawed its way into the portfolio of a famous value investor.

Warren Buffett has taken a shining to Apple. Berkshire Hathaway (BRK.A) owns 3.3 per cent of the computer company's shares. The stake is currently worth US$29-billion, according to data from S&P Capital IQ. (Disclosure: I hold Berkshire Hathaway in my portfolio.)

It's important to keep in mind that Berkshire Hathaway is itself a huge company. As a result, when Mr. Buffett wants to invest a meaningful amount of his firm's capital, he must pick from a short list of giant stocks.

Problem is, large stocks tend to perform poorly over the long run. For instance, money manager Rob Arnott looked at the performance of an investor who bought and held the largest stock (by market capitalization) in the United States for a decade, based on data from 1952 to 2011. They would have underperformed an equally-weighted index of U.S. stocks by an average of 5.4 percentage points a year.

That doesn't bode well for Apple, which is currently the largest stock in the land. It's also worrying for Alphabet, Amazon and Facebook, which come in second, third and fifth place, respectively. Netflix is a relative pipsqueak. It's the 37th-largest company in the S&P 500.

While size is a worry, valuation is also a concern. The accompanying table shows that almost all of the FAANG stocks trade at extremely high ratios.

(A brief explanation of the acronyms used in the table is in order. EV stands for enterprise value. EBIT is earnings before interest and taxes. EBITDA is EBIT before depreciation and amortization.)

The numbers might inspire particularly brave investors to short sell rather than buy most FAANG stocks because high-ratio stocks tend to perform poorly. Money managers Wesley Gray and Tobias Carlisle report in their book Quantitative Value that glamour stocks with the highest (decile) price-to-earnings ratios underperformed the market by an average of 1.75 percentage points annually from 1964 to 2011.

Apple is the only company on the list with a below-market price-to-earnings ratio. It trades at 18 times trailing earnings, which is well below the 26 mark of the S&P 500. Apple's forward earnings, based on industry analyst estimates for the next 12 months, is a reasonable 14. Apple is the best relative bargain over all. Mr. Buffett might be on to something. While it's harder to make the value case for the other firms, Alphabet and Facebook are not entirely beyond the pale. At slightly more than 21 times cash flow and forward earnings multiples in the mid-20s, a growth-related argument could be made.

Mind you, they don't tickle my fancy as a stingy investor who doesn't like to pay for growth. At more than 250 times earnings, it's hard to make the case for Amazon or Netflix.

I can't help but wonder if the FAANG stocks represent this era's equivalent of the Radio Corp. of America, which once ruled the roost only to fade over time. It seems likely that today's giants will eventually be ground down into pulp by competition and obsolescence.

While conservative investors might enjoy nibbling on Apple, they should probably avoid the other FAANG stocks. There's a chance they'll bite back like a horde of ravenous zombies.

Monstrous FAANG stock value ratios

Enterprise Value (EV)/Revenue3.96.24.312.012.1
EV/EBIT 14.723.8186.424.2168.4
Price/Earnings (trailing 12M)18.262.7252.333.8253.6
Price/Earnings (forward 12M)14.527.4183.825.3117.0
Price/Book Value6.
Price/Cash Flow13.921.140.821.9-77.0
EV/Free Cash Flow20.429.276.942.020.7

Source: S&P Capital IQ