Robinhood has garnered lots of headline space throughout the pandemic. Often the headlines concern the fundamental shift Robinhood represents for investing at large. The app has introduced a multitude of new, younger investors to the world of stocks. With new tech and a new generation, a new category of stocks has emerged, often referred to as Robinhood stocks.
Given their time horizons, younger investors are often more risk tolerant. As a consequence, the Robinhood app gains a lot of attention for movement which relates to riskier equities. Undoubtedly, almost every reader will be aware of Robinhood as it relates to GameStop (NYSE:GME), AMC Entertainment (NYSE:AMC), or any of the other multitudes of “meme stocks.”
So, Robinhood is clearly known for exposing a young cadre of investors to a riskier form of investing. Otherwise, the company is currently also notable in that it is set to undergo its IPO very soon. That IPO is expected to occur on July 29. So soon investors will be able to not only buy stocks on Robinhood, but also buy Robinhood stock.
Because Robinhood garners so much attention, investors want to know what the best stocks are to purchase from its platform. To that I’d say strong stocks for Robinhood are stocks that are strong across the board elsewhere. These seven stocks are smart purchases for August as summer winds down and the third quarter begins.
- Apple (NASDAQ:AAPL)
- Nio (NYSE:NIO)
- Carmax (NYSE:KMX)
- Vale (NYSE:VALE)
- Fisker (NYSE:FSR)
- Alibaba (NYSE:BABA)
- Taiwan Semiconductor Manufacturing (NYSE:TSM)
Robinhood Stocks for August: Apple (AAPL)
Apple just released its third quarter earnings on July 27. The thrust of that earnings report is clear: Apple is set to continue to thrive. It is, however, bound to face a few bumps in the road. Although Apple posted record June quarter revenues of $81.4 billion, share prices have dipped on concerns that semiconductor shortages could now affect it.
Prior to the earnings release the company didn’t provide exact guidance for its revenue numbers. Rather management said it expects “strong double-digit growth.” That of course, turned out to be true. Despite the semiconductor concerns, investors might expect AAPL stock to continue the upward momentum that it has experienced of late. Share prices have risen rapidly since early June at $124, to $144 in late July.
But the overall picture is clear: Apple is continuing to impress and outperform. Both UBS (NYSE:UBS) analyst David Vogt and JP Morgan’s (NYSE:JPM) Katy Huberty had raised their revenue estimates to $74.7 billion just prior to the July 27 earnings report.
Apple continues to positively surprise on the revenue front and should rise as a result. There are multiple risks facing the company currently including political headwinds and threats of a growth slowdown. At the same time, Apple has faced such worries before and come out stronger on the other side. It’s a safe contrarian bet at present.
Chinese EV manufacturer Nio has yet to reach the price levels at which it began 2021. Share prices are hovering around the lower side of $40 in late July after beginning the year above $50. Multiple factors conspired earlier this year to edge NIO stock downward.
EV stocks cooled as valuation concerns spread throughout the market. Chinese stocks faced renewed de-listing rumors on U.S. exchanges. And China adopted a much stricter stance on its homegrown tech companies, arguably rightly so. As a consequence Nio shares continually edged downward through mid-May.
But they seem to have hit an inflection point then. Since May 13 NIO stock has appreciated in price by 32%. Prices are still far from their $60 levels, indicating there’s room to grow.
And Nio should grow if its delivery results are any indication. Nio delivered 8,083 vehicles in June, up 116.1% from a year earlier. The company also delivered 21,896 vehicles in the second quarter as a whole. That represented 111.9% growth over the same period a year earlier.
It seems difficult to bet against Nio in the longer term as it continues to break delivery records and improve its fundamental financials. Which is why you shouldn’t. August is as good a time as any to initiate a position in Nio.
Robinhood Stocks for August: Carmax (KMX)
There are multiple reasons to believe Carmax is worth buying soon. All of them relate to KMX shares being a strong momentum stock play right now.
It’s no secret that inflation is rippling across the economy right now. You can argue whether the cause is a base effect, a consequence of money printing or some combination of multiple other factors. Whatever the cause, the effects are being seen across multiple industries.
One sector witnessing massive changes is the used car industry. This Consumer Reports article summarizes the issue succinctly: “In June, used cars and trucks showed both the biggest year-over-year as well as month-over-month gain across all categories.”
You and I will pay more if we go out and shop for a used vehicle. That benefits used car sellers including Carmax.
That dynamic shift led to Carmax having a great quarter. Barron’s reported “In the used car chain’s May quarter, sales came in 25% ahead of Wall Street’s forecasts, powering earnings that arrived 60% above expectations.”
Carmax should continue to impress as used car prices aren’t expected to decrease until later in the year at the earliest.
Vale isn’t likely to jump off the page as a “Robinhood Stock.” It is essentially an “old economy” iron ore and alloy producer unlikely to find itself the subject of many memes. Yet, it is sold on the platform, and it is certainly worth strong consideration heading into August.
The company’s year-to-date price appreciation of 26.44% is impressive. But if that isn’t attractive enough, consider that shares have risen from $11 to $22 over the previous 12 months. That is impressive growth. While that may make investors pause while wondering if the momentum has abated, worry not. 17 of the 20 analysts covering VALE stock rate it a buy. And the equity has an average target price of $26.62.
The company released its Q2 production and sales figures on July 19. The release showed that the company’s iron ore production growth reached 11% over the previous quarter.
Further, Vale pays shareholders a dividend of nearly 44 cents. That dividend has grown 33.8% over the past five years. It also fluctuates and paid 75.9 cents last quarter. That truth might cause a certain demographic of dividend investors to shy away. However the dividend can clearly yield a positive surprise.
Robinhood Stocks for August: Fisker (FSR)
The sub sector of SPAC funded EVs was a controversial one in late 2020 and into 2021. In hindsight there were a few companies which look downright criminal in their use of the funding scheme that avoids the harsher scrutiny of the traditional IPO process.
I believe that in time Fisker will prove to be a success story in the realm of SPAC funded EVs. I certainly believe that it should provide strong returns beginning in late 2022 and into 2023.
That may lead you to wonder why it makes sense to purchase it in August of 2021. That would be a fair question to ask. I would respond to that by noting that Fisker’s production strategy for its Ocean SUV is the answer. I believe that recent news is going to lead the market to recognize that Fisker is a safe play now. As a result there could be a surge in demand resulting in upward price pressure.
I’ve written multiple times about my belief that Fisker made an excellent decision in outsourcing production for the Ocean SUV to Magna International (NYSE:MGA). Magna’s strong production increases the likelihood that the Ocean SUV will be a solid vehicle. The two companies recently released news that they have set an initial production date of Nov. 22, 2022 for the Ocean. That relationship will remain in place through 2029.
Investors who believe in playing the long game could profit handsomely once that production ramps up.
Alibaba has under performed throughout 2021. Jack Ma, Ant Financial and Chinese regulators are largely to blame for that being true. But with the $2.8 billion fine well behind it, and a burgeoning cloud computing business in front, now is the time to buy BABA stock.
Alibaba will release June quarter 2021 results on Aug. 3. Whether those results are positive or negative will probably be immaterial in the grander scheme of things. Most pundits remain positive in that regard. That’s likely why BABA stock has remained a strong buy on Wall Street throughout 2021 despite regulatory headwinds.
Alibaba is the world’s third leading provider of cloud services, and the largest in Asia. Alibaba has been vocal in its aspirations for its cloud for years. That cloud business grew 50% in 2020.
Investors have heard the comparisons between Alibaba and Amazon (NASDAQ:AMZN) countless times. The cloud aspirations make the comparison clearer and also point to a bright future for the Chinese tech giant.
Robinhood Stocks for August: Taiwan Semiconductor Manufacturing Company (TSM)
Taiwan Semiconductor Manufacturing could certainly make a strong claim as the world’s most important company. That may strike some readers as being a bit odd given that it isn’t even a household name.
Yet, the fact remains that as the world’s leading semiconductor foundry, just about everyone depends on TSM.
My colleague Dana Blankenhorn spelled that out in a recent article. He notes that the U.S. depends on its chipsets. The U.S. would love to have TSM fabrication located stateside. That’s set to happen in 2024. So too would Germany and Japan.
The country of Taiwan remains integral to the balance of power between the East and West. And TSM exercises massive political clout as a Taiwan based foundry, and the world’s most important one. A lot of news has pointed out how important TSM is. But it actually doesn’t seem to be hyperbolic in the least.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.