There are good Robinhood stocks and there are bad Robinhood stocks. Over the last month, the discount brokerage made news for the right reasons and the wrong ones.
The good news was that it secured more than double the funds it was expecting to raise, which resulted in a valuation of $8.6 billion for the company. The bad news is that some of its customers have been buying shares of bankrupt companies such as Hertz (NYSE:HTZ).
For a time, we were seeing articles about how smart Robinhood and other retail investors are, specifically, how they were beating the pros. Let’s see how those investors are doing a year or two from now. Then, I’ll be impressed.
In the meantime, I don’t think it’s a bad idea to keep a running tab of the stocks getting the most action from Robinhood investors. Certain stocks are popular for a reason.
For example, 560,447 Robinhood investors own Apple (NASDAQ:AAPL), a stock that represents 44% of Berkshire Hathaway’s (NYSE:BRK.A, NYSE:BRK.B) equity portfolio. It’s also the sixth most-owned stock by Robinhood investors.
In every way, Apple is a winner, so that’s a good call for sure.
- Microsoft (NASDAQ:MSFT)
- Tesla (NASDAQ:TSLA)
- Amazon (NASDAQ:AMZN)
- Nio (NYSE:NIO)
- Alibaba (NYSE:BABA)
- Nvidia (NASDAQ:NVDA)
- DraftKings (NASDAQ:DKNG)
What are other good Robinhood stocks to own for the long haul? Here are my top seven from its list of the 100 most popular.
Robinhood Stocks to Buy: Microsoft (MSFT)
A total of 552,259 Robinhood investors own MSFT stock. It’s the seventh most popular right behind Apple. If I were to recommend a one-two combination of stocks to hold in the tech sector, AAPL and MSFT would be it.
InvestorPlace analyst Louis Navellier rates Microsoft as a “strong buy.” As for InvestorPlace contributors who’ve written about the tech giant recently, it was Thomas Niel’s July 15 article that caught my eye.
Niel included Microsoft in a group of five stocks to buy for beginners. With products such as Windows, Microsoft 365, Microsoft Teams and even LinkedIn, it’s about as familiar a tech company for those that aren’t well versed in the sector.
“With $134 billion in cash on its balance sheet, the company has plenty in its war chest to move the share price higher. Whether it be from game-changing acquisitions, or via stock buybacks or dividends, this stable cash cow remains one of the best stocks for those starting out investing,” Niel wrote.
I couldn’t agree more.
That’s why I said in April that it was time to ride Microsoft stock to $200 and beyond. Up 20% since the article, Robinhood investors also expect more good things to happen for the company in the future.
Tesla is the eighth most popular stock with a total of 490,588 Robinhood investors owning shares in Elon Musk’s baby.
If Tesla were a part of the S&P 500, it would be the 13th-largest company by market capitalization in the index. Alas, it currently is on the outside looking in, but that could soon change.
Wedbush analyst Dan Ives believes that the maker of electric vehicles will soon be added to the index.
“While Street numbers are all over the map and looking for red ink this quarter, we are modeling profitability with the 90k delivery number,” MarketWatch reported July 20. “… This quarter is another step forward in the Tesla story as Musk & Co. must deliver to match euphoric Street expectations baked into the stock.”
I’ve been bullish about Tesla’s chances for several years. However, it is my November article that suggested hitting $400 for the third time would be all the push it needed to move higher. It’s up 386% in the nearly eight months since.
“While Ford and GM might perceive Elon Musk as the competition, Musk looks at the industry in an entirely different light. When Ford released the Mustang Mach-E on Nov. 18, Musk was the first to congratulate the company,” I wrote at the time.
The reality is Elon Musk only competes with himself. As long as he’s got fire in the belly, Tesla’s an excellent bet for Robinhood investors.
Robinhood Stocks to Buy: Amazon (AMZN)
Approximately 383,519 Robinhood investors own Amazon stock. The e-commerce giant is the 13th largest holding on the platform.
AMZN stock is having a great year in the markets with a year-to-date total return of 70%. It might not be the 275% YTD return of Tesla, but it’s pretty darn good. And it’s about to move even higher.
On July 20, several analysts upped their assessment of Amazon over the next 12 months.
MKM Partners analyst, Rohit Kulkarni, who has a “buy” rating on its stock, raised his target price by 33% to $3,350. Jefferies analyst Brent Thill also has a “buy” rating on AMZN stock. He increased his target by 23% to $3,800, and Goldman Sachs analyst Heath Terry raised his price target by 27% to $3,800.
In January 2018, I said Amazon’s stock could hit $10,000 within the next 7.5 years. At the time, it was trading around $1,300. As I write this, it’s up 142% to $3,150. More importantly, it’s only got $6,850 to get there.
Based on the company’s historical performance, I could see Amazon hitting $10,000 as early as October 2023, almost two years ahead of schedule.
This is one stock Robinhood investors shouldn’t sell.
Just outside the top 20 in the 21st position, 269,971 Robinhood investors own its stock.
It took me a while to warm up to the Chinese maker of electric SUVs, but now that I have, I’m not sure I’ll ever be able to give a negative viewpoint on the company.
Recently, NIO stock was up more than 12% on the day to almost $13. That’s a big bounce after its share price lost 26% of its value in the five days between July 13 and July 17.
The Motley Fool’s John Rosevear had an excellent synopsis on July 19 why NIO stock dropped so much a week earlier. In his opinion, Nio’s valuation had gotten ahead of itself and was due for a smack-down.
I last wrote about Nio on July 14, right in the middle of its 26% retreat. Here’s what I had to say about its share price:
“If you bought Nio stock for the long haul (three to five years), I wouldn’t sell at this point. However, I would buy some more if it drops into the low teens,” I wrote. “Until Nio’s growth game comes to an end, I would not get off its wild ride. As for those who haven’t bought just yet, I think my colleagues are right about getting a better entry point to buy its stock.”
Under $10, Nio is an excellent buy. At current prices, if you’re going to hold for 3-5 years, I don’t see a problem buying Nio. However, I’d probably save a little dry powder to buy some more if it falls into single-digit prices.
Nio’s management has done an excellent job righting its ship. The future looks much brighter today than it did even six months ago.
Robinhood Stocks to Buy: Alibaba (BABA)
Alibaba is the 23rd largest holding of Robinhood investors. I would have thought more of the discount broker’s clients would have owned BABA, but only 245,615 currently have an interest in the Chinese e-commerce company.
As companies go on this list of Robinhood stocks, Alibaba is having a mediocre year, with a YTD total return of just 21.6%, well below the 48% of its internet peers. Long term, it’s had reasonable, if not spectacular, performance.
Investors.com reported July 20 that Alibaba’s 618 shopping festival, which is held each year on June 18, delivered $98.52 billion in sales, a company record for this one-day shopping extravaganza.
However, the novel coronavirus did slow it down. Its fourth-quarter results through the end of March saw adjusted earnings increase by just 2% while revenues grew 16%. On the bright side, its adjusted earnings of $1.30 a share were well about the consensus estimate of 85 cents. On the top line, analysts expected revenue of $15.1 billion. It delivered $16.1 billion.
“Alibaba achieved the historic milestone of $1 trillion in gross merchandise volume across our digital economy this fiscal year,” said Alibaba CEO Daniel Zhang in May. “Our overall business continued to experience strong growth, with a total annual active consumer base of 960 million globally, despite concluding the fiscal year with a quarter impacted by the economic effects of the COVID-19 pandemic.”
Recently, I argued that Alibaba remained in a good position to test $300. One of those reasons was its 33% investment in the Ant Group, the operator of online payments platform Alipay. On July 20, Ant announced that it would list its shares simultaneously on the Stock Exchange of Hong Kong and the Shanghai Stock Exchange.
Ant’s IPO is one more reason to own BABA stock.
Given how popular gaming is these days, I’m surprised that Nvidia is only the 50th largest holding of Robinhood investors at 142,649.
I’ve always liked Nvidia over many of its peers because the chipmaker generates tremendous free cash flow, something that comes in handy during a pandemic.
“Not only have Nvidia’s bond issues put it in a better cash position than AMD, but as I’ve said in the past, its superior free cash flow makes it a stronger candidate during the current economic downturn,” I wrote in late April. “Further, as InvestorPlace’s Louis Navellier recently stated, Nvidia generates about 50% of its profits from gaming. With the coronavirus keeping people at home, many of them are turning to video games. As a result, Nvidia’s free cash flow might not take a big hit from the pandemic.”
I went on to say that if I were in my 20s, and wanted something to own for 40 years or more, NVDA stock would be at the top of my list.
Up almost 76% year to date, its strong performance in 2020 is a reminder of why chip stocks should not be avoided despite their above-average volatility.
Robinhood Stocks to Buy: DraftKings (DKNG)
Probably even more surprising is the fact that DraftKings is only the 58th largest holding of Robinhood investors at 116,995. I guess the lack of sports scared away investors who thought it was dependent on sports betting to grow its revenues.
While a number of my InvestorPlace colleagues feel DraftKings is a risky bet at the moment — Chris Markoch on July 16 and Mark Hake on July 15 — I believe that Rosenblatt analyst Bernie McTernan has the right idea about the former special purpose acquisition company, turned vertically integrated betting and fantasy sports platform.
SmarterAnalyst.com’s Ben Mahaney had something to say about McTernan’s opinions recently.
“McTernan ‘continues to be bullish on DKNG,’ after recent data pointed to positive trends in the online gaming space,” Mahaney reported July 16. “The analyst believes ‘investors should use the recent pullback in shares, likely related to near-term uncertainty of sports returning, as a buying opportunity, especially for those with long-term time horizons.’”
McTernan has a “buy” rating and a $60 target price on DKNG stock. As I write this, that represents 60% potential upside.
From a valuation perspective, DKNG stock is expensive. But as I said in my most recent article about the company, sometimes you have to pay up for quality.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.