As awful as the novel coronavirus pandemic has been for our country, it did bring some positive outcomes. For instance, many people have used this forced downtime to reconnect with family and long-lost friends. For others, it was an opportunity to try new things, such as investing. Naturally, popular trading app Robinhood was one of this epidemiological disaster’s big winners as newbies bought up the hot Robinhood stocks of the moment.
On the surface, the excitement toward Robinhood is a welcome development. Before the pandemic overran our daily lives, many people, especially younger folks, just didn’t care about putting their money into the stock market. This pensiveness to put their funds to work was in sharp contrast to prior generations. However, millennials have been scarred by multiple recessions and market collapses.
Indeed, nothing was working until the coronavirus started knocking on our doors. Suddenly, as the Wall Street Journal pointed out, everybody was channeling their inner Gordon Gekko. Again, while this was generally a welcome development, many veteran traders noticed strange dynamics pop up. For instance, bankrupt or otherwise embattled organizations inexplicably made the list of hot stocks, receiving bullish sentiment they had no business attaining.
This came to be known as the Robinhood phenomenon. Essentially, newcomers to investing were getting a crash course to Wall Street. Still, not all the publicly traded companies that shot higher was due to irrational tactics. Rather, these seven hot stocks prove that many Robinhood users know exactly what they’re doing:
- Microsoft (NASDAQ:MSFT)
- Nike (NYSE:NKE)
- PayPal (NASDAQ:PYPL)
- Peloton (NASDAQ:PTON)
- Ford (NYSE:F)
- Uber (NYSE:UBER)
- Moderna (NASDAQ:MRNA)
No doubt, there are some whoppers on Robinhood’s Top 100 list. But before you write off the entire platform, you should examine the probable strategies underlining the app’s top companies. You just might learn something. So without further ado, here are seven hot Robinhood stocks to buy now.
To demonstrate that not all hot stocks on Robinhood’s most popular list is irrational, Microsoft bucks the notion that new traders are in it for a quick buck. Certainly, you’re not going to get rich with MSFT stock, at least not right away. However, the house that Bill Gates built has proven reliable through some treacherous terrain.
But unlike other crises that negatively impacted MSFT stock, the novel coronavirus pandemic may turn out to be a benefit. Sure, like any other publicly traded company, Microsoft fell into the dumps in March. Since then, it’s been a decidedly positive ride.
Of course, much of the enthusiasm is centered on the rethinking of the corporate environment. When the outbreak first hit us, millions of employees were sent home, forced to work from their personal spaces. According to some reports, remote work is here to stay. Not surprisingly, many worker bees want the benefits of working from home to be permanent.
As you would expect, a full consensus doesn’t exist regarding this discussion. For instance, some companies find remote work to lead to lack of productivity. Either way, MSFT stock benefits because of the newfound appreciation for its business application software, which has become even more indispensable.
Before the pandemic, anyone could appreciate the case for Nike being among the hot Robinhood stocks to buy. As one of the hottest global brands, Nike could easily command premiums for its vast library of products. Further, it didn’t hurt that competitor Under Armour (NYSE:UA, NYSE:UAA) hasn’t been able to keep up with the icon of athletic apparel. Thus, NKE stock made sense.
However, with a raging pandemic, the narrative for all consumer discretionary names absorbed damage. It’s not hard to understand why. Back in April, the personal saving rate soared to nearly 34%. That’s a record since the government kept track of the data. And I’d like to add, a record by a country mile. Therefore, NKE stock didn’t seem like a smart bet.
Still, Robinhood traders have latched onto Nike as one of the hot stocks to buy likely for two reasons. First, the brand is familiar to millennials. Not only that, this is a company that was far ahead of the racial justice issue. Remember that Nike took serious heat from conservatives when it supported Colin Kaepernick for bringing attention to police brutality.
Second, buyers of NKE stock probably perceive that we’re headed toward a K-shaped economic recovery. Specifically, we may face a huge split between educated workers – who have a very low unemployment rate relatively speaking – and the high-school-only crowd. And high-income earners exercise more, thereby are likely to buy Nike products.
Before the new normal, PayPal was easily one of the hottest stocks to buy. Thanks to its intuitive payment processing platform, the underlying business was much more relevant to the current generation of professionals. Due to innovations in digital payments, especially blockchain and cryptocurrencies, the idea of physical cash has steadily lost support. Hence, PYPL stock is known to generate explosive gains in short time periods.
Further, the pandemic has really given the cash argument a good beatdown. In this environment of social distancing and minimizing contact, paper money is out of the question. Even moving forward, it’s possible that the coronavirus could have a lingering mental/psychological effect. That alone might be worth consideration for PYPL stock.
More importantly, though, PayPal is socially relevant. With so many people displaced due to this crisis, it’s possible we could see a wave of underbanked and unbanked individuals. Theoretically, PayPal provides a platform that enables professionals to reconnect financially.
This will be particularly relevant as many workers explore the idea of becoming independent contractors. If more professionals take this road, the utility of PayPal will be immediately apparent. Thus, I’m optimistic about Robinhood stocks like PayPal.
To give you an example of how much the world has changed, in December of last year, social media erupted with criticism over Peloton. The controversy? Peloton had the gall to advertise its stationary exercise bike, which featured a male character gifting the bike to his wife, who happens to be thin and attractive.
Yeah, that was the biggest problem back then.
Still, that was the old normal and we had no idea what was to come. Therefore, social justice warriors gleefully watched PTON stock take a hit from the “scandal.” In my view, it was a silly commercial but nothing to get worked up over.
Well, things are different now. As Robinhood traders have voted with their wallets, Peloton is one of the hot stocks to buy this year. Due to the pandemic, the idea of sweating it out next to other strangers in an enclosed space isn’t enticing. Plus, with most of the company’s core consumer base working from home, the extra time people would have spent commuting to work could be transferred to personal health and wellness.
Of course, a risk exists that PTON stock could crumble once the pandemic fades. However, keep in mind that severe economic crises can have a lasting impact on some people. Thus, don’t be too quick to write off Peloton.
One of the biggest shifts I’ve ever made in terms of hot stocks is Ford. Previously, I have shared – perhaps overshared – my disdain for American cars. Though I’ve never bought one myself, I’ve driven a few. Plus, I’m just going to be honest: I don’t like the image that often comes with Detroit muscle.
Who knows if I’ll ever change my mind. Never say never, I suppose. But one thing I did do a switcheroo on is F stock. For years, the company has floundered with boring, irrelevant products. But with the iconic automaker’s foray into electric vehicles, I’m a believer now.
As an automotive enthusiast, my change of heart may be perplexing. Ford upset its fan base when it slapped the Mustang brand on its Mach-E electric SUV. As you probably know, the Mustang has always been a two-door pony car. The idea that an SUV would bear the proud American badge was sacrilegious to gearheads.
Believe me, I get the passionate arguments. However, you’ve got to look at this from the valuation perspective of F stock. Simply, the buyers who are pony car loyalists are dying off. Nowadays, people want SUVs. And the gorgeous Mach-E will provide all consumers with a viable alternative to Tesla (NASDAQ:TSLA).
In my book, F stock is a risk worth taking.
With the last two hot stocks featured on Robinhood, I’m going to explore the speculative spectrum. First up is ride-sharing giant Uber. From a familiarity standpoint, it’s easy to see why so many Robinhood traders have invested in UBER stock. Likely, to them, it’s one of the most recognizable publicly traded companies. Plus, they probably take advantage of the service on the regular.
And that fact alone might be worth exploring the contrarian angle. A common piece of advice that financial analysts give is to invest in businesses with which you’re familiar. Therefore, with UBER stock, a Robinhood fan may be able to provide some insights you won’t receive from other sources.
Obviously, I’m not recommending you bet the farm on this speculative company. After all, Uber has several controversies and headwinds that have clouded its bull case.
I can’t explore them all on this article. However, a massive challenge is the state of California. Last year, California legislators passed a contentious law initially designed to help ride-sharing drivers receive benefits. The problem is, it upended the concept of independent contractors, leaving many people – including those with completely unrelated job titles like comedians – with disrupted revenue channels.
Call me crazy, but I think California will back down from its lunacy. These are the kinds of overarching laws that make people vote Republican – I’m not kidding! So, UBER stock might win out, but play this game with money you can afford to lose.
With the sad, unwanted arrival of the novel coronavirus to our shores, biotechnology firms have been scrambling for an answer. Likely, we will need a vaccine to help foster the transition to some semblance of the old normal. And that’s the reason why Moderna has been the hottest of hot stocks in this segment.
As well, Moderna ranking so highly on Robinhood relative to other vaccine plays suggests that many folks trading on this platform have carefully strategized their position. Strictly talking about the vaccine race, in my opinion, MRNA stock is the most viable. Unlike other biotech firms and pharmaceuticals, Moderna has not had any hiccup with its messenger RNA (mRNA) based vaccine candidate.
Just as importantly, MRNA stock is levered to an approach that features easier manufacturing of vaccines. As part of the nucleic-acid based format, Moderna is involved in an experimental journey. There has never been an mRNA or DNA vaccine approved by the Food and Drug Administration so an approval here will be a first.
However, there is one drawback to mRNA vaccines I’d like to point out. According to the New England Journal of Medicine, the relatively low level of antibody titers in the first dosage suggests that Moderna’s candidate will likely be a two-dose vaccine.
Still, it may be worth considering MRNA stock for the groundbreaking science.
On the date of publication, Josh Enomoto held a long position in F stock.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.