It has been quite a year for Robinhood users. Due to the pandemic, usage of the popular trading app (which is privately owned right now but is preparing for an initial public offering targeted for July 29) skyrocketed among amateur investors. Most of them did not have a lot of experience. But they did have stimulus money, leading to Robinhood stocks generating a lot of headlines.
The relatively young and green Robinhood trader base has had some huge hits and misses in recent quarters. But no one doubts their impact and the long-term implications of their rise. Robinhood estimates almost half of all new U.S.-funded retail accounts opened from 2016 and 2021 were Robinhood accounts.
The company revealed it has 18 million retail clients and more than $80 billion in customer assets when filing its prospectus. According to Robinhood’s S-1 filing with the Securities and Exchange Commission, the brokerage produced a net income of $7.45 million on net revenue of $959 million in 2020 compared to a loss of $107 million on $278 million in 2019.
Make no mistake about it, Robinhood is an investing powerhouse now. It’s a good idea to take note of stocks that are gathering steam on the platform. Although much of the momentum is based on retail trading, it is still contributing to returns.
So keep an eye on the following five Robinhood stocks, which, incidentally, happen to be excellent picks in their own right:
- Ford Motor (NYSE:F)
- Apple (NASDAQ:AAPL)
- General Electric (NYSE:GE)
- NIO (NYSE:NIO)
- The Walt Disney (NYSE:DIS)
Robinhood Stocks To Buy: Ford Motor (F)
Ford may seem like an anomaly among Robinhood stocks. But the legacy automaker is among the top Robinhood stocks for the third quarter. When I wrote about Ford last August, I touched on several positive catalysts, including Ford’s new CEO, Jim Farley.
The stock has performed well since that article’s publication, and a lot of the credit has to go to the management. Farley is a company insider with extensive experience in how Ford operates and shows the same dynamism demonstrated during his time at Toyota (NYSE:TM).
In the first quarter, Ford reported $4.8 billion in earnings before interest and taxes, a dramatic contrast to one year ago when the iconic car company fell to negative $632 million, the first such quarterly loss since 2009 during the Great Recession.
Ford ended the quarter with $31 billion in cash on hand and $47 billion in liquidity. The automaker has said its adjusted pretax earnings for the second quarter will “surpass its expectations” and be significantly better than a year earlier.
The company is not ignoring the EV revolution either. In May, Ford upped its planned investment in EV and autonomous vehicle technology from $22 billion to $30 billion through 2025, under Farley’s new “Ford+” plan to turn around its operations and expand into emerging markets such as connected vehicles and subscription services.
Overall, Ford is in a very healthy place for the first time in a long time. Yes, the stock gained a substantial amount of ground last year. But it is still more affordable than the majority of EV plays out there.
Apple (AAPL)
Who said Robinhood investors only valued penny stocks? iPhone maker Apple, one of the most profitable companies and consistent performers in the market, happens to be a favorite of the Robinhood crowd as well.
The company is all set to release its next set of earnings on July 27. But really, should we expect anything other than outstanding numbers? After exceeding revenue estimates by more than $12 billion last quarter, expectations are sky-high going into fiscal Q3.
The company has made a habit of beating analyst estimates. According to CNBC data, the American multinational technology company has consecutively surpassed consensus estimates in the last six quarters.
For the fiscal year that ended September 26, 2020, Apple posted a net profit of $57.4 billion on revenue of $274.5 billion compared to $260.2 billion in sales and $55.3 billion in net income for fiscal 2019. During the second quarter, Apple recorded a March quarter record of $89.6 billion in revenue, up 54% year on year, and significantly stronger profits than Wall Street expected.
Apple reported double-digit growth in every product category, and its most crucial product line, the iPhone, was up 65.5% from last year. Its Mac and iPad sales exceeded this growth, with its computers up 70.1% and iPad sales growing nearly 79% compared to the year-ago period. Apple’s high-margin services business segments, including iCloud, App Store, and subscriptions like Apple Music, also grew by 26.6%.
Robinhood Stocks To Buy: General Electric (GE)
General Electric is about as traditional as you can get in the investment world. Universally acknowledged as a great long-term asset, GE stock was one of the best American investments of the 20th century.
Despite struggling over the past few years, GE has shown signs of improvement through selling non-core assets through which it has been able to pare down debt. The iconic American company’s struggles can be traced back to the 2008 financial crisis when it became clear GE was overstretched and bloated.
But under Jeffrey R. Immelt, the company could return to its roots in manufacturing by selling billions of dollars in non-core assets. Somehow the company managed to survive and thrive. Part of the reason is that GE has never let go of certain core concepts. Each successive CEO has managed to bring down debt significantly and refocus attention to core areas.
GE’s business is based on four industrial segments: power, renewable energy, aviation and health care. GE isn’t out of the running yet, but there’s work to be done as a large conglomerate. Patience is a virtue with this one, as ace investor Louis Navellier touched upon in his analysis. But Robinhood investors are optimistic about the turnaround efforts.
Nio (NIO)
U.S.-listed Chinese electric vehicle (EV) makers Li Auto (NASDAQ:LI), Nio, and Xpeng (NYSE:XPEV) gained serious steam last year. Buoyed by the general enthusiasm surrounding EV makers and China’s development plan for its new energy vehicle (NEV) industry from 2021-2035, it will accelerate the country’s transformation into an automotive EV giant.
My colleagues on InvestorPlace are very bullish on these Chinese EVs, and there is a reason for their enthusiasm. China has the largest EV market globally and a burgeoning middle class; both factors will contribute significantly to the local EV market for the foreseeable future. And as the biggest EV maker in China, Nio has the most to gain from this situation.
Both in terms of financials and total deliveries, Nio is on fire. Nio delivered 21,896 vehicles in the second quarter, a new quarterly record representing a strong increase of 111.9% year-over-year. On a trailing twelve months (TTM) basis, the top line has grown 202.3%, and the momentum shows no signs of slowing down.
NIO also enjoys Chinese government support, a key determinant of future success in the region. In China’s central Anhui province, the local government of Hefei provided an injection of over $1 billion to NIO, alleviating concerns the EV maker was running out of cash.
In exchange for the cash injection, NIO Holding and state-backed JAC Motors established a new subsidiary. And it built a facility in Hefei to serve as headquarters for the subsidiary.
U.S. investors might be squeamish due to the strategic relationship. But as the recent issues with Alibaba Group (NYSE:BABA) illustrate, a healthy association with the Chinese state is imperative for long-term success and sustainability.
Robinhood Stocks To Buy: Disney (DIS)
The pandemic had a devastating impact on Walt Disney’s cruise, theme park, cable TV, live sports, cinema, and retail businesses. According to the company’s Q1 SEC filing, Disney cut its capital expenditure on domestic and international theme parks by approximately 50% year-over-year. It has already eliminated thousands of jobs at its resorts.
Although the entertainment giant has had a mixed journey, a saving grace has been its Disney+ streaming service, which launched in November 2019. In its Q2 FY 2021 earnings report, the number of Disney+ subscribers rose more than 200% compared to the year-ago quarter. The platform offers Disney, Pixar, Marvel, Star Wars, and National Geographic branded content in the U.S. and around the globe. Naturally, this will be a major driver of growth moving forward.
Meanwhile, Disney’s legacy businesses will recover in 2021 and beyond, making it an intriguing recovery play with room to run. Robinhood investors also have similar bullish sentiments, and that is why DIS is one of their top stocks.
On the date of publication, Faizan Farooque 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.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.