The past year has seen a big jump in small investors buying individual stocks. And, that’s no surprise, given how a strong stock market, coupled with the ability to buy stocks with zero commissions, has made investing much more accessible to retail investors. If you’re reading this, you may be one of them. If that’s the case, you may also be wondering which stocks to buy.
Where’s a good place to get some ideas? How about Robinhood itself? More specifically, the list of most traded stocks on the retail investing app. Sure, you can’t just buy the most popular stocks out there, set it, and forget it. You need to do your research. But, taking a look at which names are most active among small investors can give you an idea of where the opportunities may lie.
These opportunities include many blue-chip names (particularly in the tech space) that have “crushed it” over the past 12 months. But, also, some of them are more speculative growth plays, which despite the risk, may be long-term winners in the making.
You may not to jump into all of them at the same time. For some, you may want to wait for a more opportune entry point. But, if you are a new investor, just starting out with your first Robinhood account, consider these 10 stocks to buy:
- Apple (NASDAQ:AAPL)
- Amazon (NASDAQ:AMZN)
- Churchill Capital IV (NYSE:CCIV)
- Walt Disney Co. (NYSE:DIS)
- Ford Motor Co. (NYSE:F)
- General Electric (NYSE:GE)
- Microsoft (NASDAQ:MSFT)
- Nokia (NYSE:NOK)
- Pfizer (NYSE:PFE)
- Walmart (NYSE:WMT)
Stocks to Buy: Apple (AAPL)
After soaring nearly 100% in the past 12 months, why buy AAPL stock right now? Good question. Sure, last year’s mad dash into big tech stocks may give the appearance that tech stocks have been overbought. But, while that could be case for some overheated names, that’s not the case here with the iPhone powerhouse.
Why? Sporting a forward price-to-earnings ratio of 30.2x is cheap, you can’t call Apple a cheap stock. Yet, this valuation is in line with similar names in the FAANG composite of large tech-based companies. That at least should keep valuation concerns at bay. But, what specifically makes this a great opportunity?
Handily beating expectations last quarter, the company may be set to beat once again (the company next announces earnings later this month). And, it doesn’t hinge completely on the continued success of the iPhone 12. As you may know, the company has made a big shift into services (think app sales, etc.) in the past few years. The sales of hardware like the iPhone 12, along with items like Airpod headphones, and the Apple watch, remains a big part of business.
But, the big move into areas like services, content, and autonomous vehicles, could mean plenty more runway ahead of this trillion dollar-plus company. With this in mind, there’s no reason to worry things are “topping out.” Instead, consider AAPL stock a buy at $134 per share.
Yes, at $3,372 per share, fitting this into a $5,000 portfolio may be a challenge. But, InvestorPlace’s Will Ashworth pointed out March 1, with fractional share ownership, you could in theory include four-figure per share Amazon stock in your first portfolio.
AMZN stock is a name that needs little introduction. You know full well it’s been crushing it thanks to the rapid shift to e-commerce due to the novel coronavirus. Not only that, it’s quietly starting to dominate industries out of its initial wheelhouse. From content distribution to cloud services, Jeff Bezos’ retail and tech powerhouse has expanded into many sectors.
But, does that translate into big gains for investors going forward? It depends. I wouldn’t expect this stock to soar over the next 12 months as it’s done over the prior 12. Yet, as trends remain on its side, shares could continue to gradually climb. It may not be a stock that makes you big gains over the coming decade. Yet, it’s definitely a name that could deliver above-average returns in the coming years.
Sure, it’s not without risk. Trends may be on its side. But, now playing a larger role in the overall U.S. economy, expect it to be even more in the crosshairs. Sure, it recently scored a victory against unionization in Alabama. This may signal organized labor is not a threat to it. Yet, with big critics on both sides of the political aisle, it could wind up facing more regulatory scrutiny.
Churchill Capital IV (CCIV)
Churchill Capital IV is the SPAC (special purpose acquisition company) that’s taking electric vehicle (EV) startup Lucid Motors public. The stock soared to unsustainable levels earlier this year, as rumors about the deal came out well before its official announcement.
However, following the news, speculators cashed out, big time. Shares have fallen more than 64% off their all-time highs. That’s been bad news for investors who bought at or near the top. But, for new investors, who may not own it yet, this risky stock, still popular with the Robinhood set, may be worth it at today’s prices (around $20 per share).
Why? As I’ve noted previously, this EV startup has all the ingredients in place to give market leader Tesla (NASDAQ:TSLA) a run for its money. Not only that, as this established rival tries to go from high-end to mass-market, Lucid could clean up, as it slowly becomes the electric car with the most brand cache.
Admittedly, while there is substance to the Churchill/Lucid bull case, for now a lot of the enthusiasm remains built on hype. As its cars have yet to roll off the assembly line, a lot still needs to play out. But, when comparing risk versus potential return, new investors may find it worth it to take an appropriately-sized roll of the dice with CCIV stock.
Stocks to Buy: Walt Disney Co. (DIS)
For most of 2020, concerns over the future of its theme parks weighed down on DIS stock. But, so far in 2021, its exposure to the streaming megatrend has turbocharged the media conglomerate’s shares.
Shares have gotten a little overheated, so buying it today may not be the best move. However, keep it on your radar. Why? Forward earnings may look atrocious. Again, this is due to the theme park division’s pandemic-related headwinds. But, said earnings are expected to recover in a big way come fiscal 2022 (fiscal year ending September 2022). The average of sell-side estimates call for $4.81 per share in earnings for FY22.
Add in the continued growth of its streaming platforms (Disney+, ESPN+, Hulu), and earnings could be as high as $6.36 per share next year. Sure, even in a best-case scenario, valuation still looks stretched. It may need even stronger-than-expected results to sustain its current share price (around $186 per share).
So, what’s the best move? Wait for a pullback. But, as one of the best stocks to buy and hold for the long haul, consider it a blue chip to keep on your list of stocks to buy.
Ford Motor Co. (F)
F stock has long been popular with Robinhood investors, even before the retail investor mania of the past year took hold. You could chalk it up to its formerly low share price. Its brand ubiquity could play a role behind its popularity as well.
But, whatever the reason, those who dived into this popular name at its lows have won big. Shares are up a staggering 133% in the past year. Yes, it’s easy to say this is due to its resiliency during the pandemic. Yet, the company’s aggressive pivot toward vehicle electrification likely helped to move the needle as well.
So, why buy Ford stock today, after it’s gone on a massive upward run since last April? While shares have already soared on the heels of the recovery, this may not be fully priced-in just yet. Plus, with expected earnings per share (EPS) of $1.16 this year, and $1.58 next year, it may be ready to resume its prior 60 cents per share in annual dividend payouts.
There may not be enough in play to make F stock double again in the next year. But, with the recovery still in its early stages, additional moves higher may be in the cards. Consider this another great stock for new investors on Robinhood.
General Electric (GE)
GE stock is yet another that’s been popular with Robinhood investors for quite some time. But, it’s only been in the past few months that the fledgling industrial conglomerate, which was in the middle of a large-scale turnaround when Covid-19 first hit, has seen its shares make an epic rebound.
Yet, even after its more than 98% surge since October, additional gains from the General Electric turnaround may still be on the horizon. At least, that’s the view of UBS’s Markus Mittermaier. The analyst recently raised his price target on the stock, to $17 per share (the stock trades for around $13.60 per share today).
His rationale? Mittermaier cites the company’s success with its debt reduction efforts. In the past year, it’s reduced debt by $70 billion, and is set to shed another $30 billion over the next few years. Combined with the improvements to its operating businesses (aviation, healthcare, power, etc), and its continued unwinding of GE Capital, it’s easy to see why this analyst sees big upside ahead.
That being said, there’s no guarantee the still-in-motion turnaround will result in a move toward $17 per share for GE stock. Other analysts remain cautious, given the company’s aviation business is many years away from a full post-pandemic recovery. So, what’s the best way for a new investor to approach this popular Robinhood stock? Tread carefully, and perhaps wait for a pullback before buying.
Stocks to Buy: Microsoft (MSFT)
MSFT stock has been one of the best known stocks for decades. And, as the world’s second largest company by market capitalization, it’s one of the most widely held stocks by investors. Including active users on the Robinhood app. But, that’s not the reason why you should own it.
What’s a better reason? As InvestorPlace’s Alex Siriois wrote March 26, the venerable tech colossus is an interesting mix of value stock and growth stock. That is, with strong, consistent cash flows, a stable dividend, and a forward earnings multiple (34.7x) more reasonable compared to other tech stocks, it could be seen by some as a value stock.
But, with the double-digit rise in its revenues and earnings, driven largely by the success of its Azure cloud business, and its Office365 cloud-based platform, it gives you many of the advantages of a growth stock as well. Sure, much of its underlying growth (and share price growth) over the past year was due to one-time pandemic-related boosts in demand. Yet, even as the virus slowly dissipates, don’t expect Microsoft’s continued growth to come to a screeching halt.
Between continued growth in its cloud segment, as well as the potential for upcoming acquisitions, such as its rumored plans to purchase AI (artificial intelligence) and speech recognition company Nuance Communications (NASDAQ:NUAN), there’s enough in play to make this a great stock for experienced and new investors alike to buy-and-hold for the long-haul.
As of late, Nokia has been best known as a meme stock. This has made it not just a popular holding among traders on Reddit’s /WallStreetBets. Its popularity online has made it one of the top stocks held by Robinhood investors as well. But, while meme-stock status comes with a lot of baggage, that alone shouldn’t be a deal breaker.
Why? The telecom equipment maker faces many challenges. Its much-discussed turnaround remains a work in progress. Nokia’s also trying to capitalize on the “5G Revolution.” But, rivals like Ericsson (NASDAQ:ERIC) and Huawei have done a much better job locking down lucrative 5G contracts.
So, why bother with this 5G also-ran? After its big pullback following its short-lived February meme stock rally, this stock, much more risky than the aforementioned blue chips popular on Robinhood, may be a cautious buy. In other words, even for new investors, buying a small position could pay off in the coming years, if the company can finally get its house in order, and prove to investors its still a relevant name in the telecom equipment space.
A move back down to its lows (around $3.14 per share) remains a possibility, given the risk it continues to underwhelm investors with its quarterly results. But, with the potential for it to prove its bears wrong, and start moving back to prior price levels (above $6 per share), risk/return may be in your favor here.
This pharmaceutical giant’s vaccine success may be what’s behind its popularity on Robinhood. But, unlike Covid-19 vaccine pure plays like Moderna (NASDAQ:MRNA), the success of its candidate, which it developed with BioNTech (NASDAQ:BNTX), hasn’t translated into a materially higher stock price.
At around $36.60 per share, PFE stock has barely budged in the past year. But, its underwhelming performance over the past 12 months shouldn’t scare you away from buying it. How so? For starters, there is more on the table with the company than just its vaccine.
Yes, the company is struggling to move the needle overall when it comes to earnings growth. And, this lack of earnings growth comes even after its divestiture of its slower-growing Upjohn unit, which merged with Mylan to become Viatris (NASDAQ:VTRS). But, with low expectations more than baked into its share price, any sort of positive news could move the stock higher in a big way.
In addition, with its 4.26% dividend yield, consider this a stock that pays you while you wait for investor sentiment to shift. Don’t expect this stock to produce monster gains for your portfolio. Yet, as a lower-risk, more blue-chip name, it could deliver strong returns for those with a longer investment time horizon.
Stocks to Buy: Walmart (WMT)
Any sort of list consisting of the best first stocks to buy wouldn’t be complete without Wal-Mart stock. But, there’s more than just its size and stability that makes it for a great long-term investment idea.
As you may know, the pandemic meant boom times for both the retail giant’s brick-and-mortar operations, along with its e-commerce business. As one of the few types of stores that could stay open during lockdowns, discount retailers cleaned up in 2020.
Of course, investors have been aware of Walmart’s success in the past year. That’s why shares today sport a fairly rich valuation (forward P/E ratio of 25.7x). Given that, based on analyst earnings projections, sales dip a bit after last year’s unique circumstances, shares appear overheated at first glance. But, after its February selloff, today’s prices (around $140 per share) could be a solid entry point.
Why? As a Motley Fool contributor recently opined, its pivot from strictly brick-and-mortar to omnichannel (in-store and online) retail may just be getting warmed up. With the potential to further evolve into an Amazon-like business, WMT stock is a great stock for new investors to buy for the long teRm.
On the date of publication, Thomas Niel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Thomas Niel, a contributor to InvestorPlace, has written single stock analysis since 2016.