Buying a stock is deceptively easy, but purchasing the right stock at the right time without a proven strategy is incredibly hard. So what are the best Robinhood stocks to buy now or put on a watchlist?
At the moment, Google parent Alphabet (GOOGL), software giant Microsoft (MSFT) and PayPal (PYPL) are standout performers. Unlike GameStop (GME) and AMC Entertainment (AMC), which have been hitting the headlines of late, these stocks offer a mix of solid fundamental and technical performance.
Best Robinhood Stocks To Buy: The Crucial Ingredients
There are thousands of stocks trading on the NYSE and Nasdaq. But to generate big gains you have to find the very best. The best Robinhood stocks for investors will be those that offer a mix of earnings and stock market performance.
The CAN SLIM system offers clear guidelines on what you should be looking for. Invest in stocks with recent quarterly and annual earnings growth of at least 25%. Look for companies that have new, game-changing products and services. Also consider not-yet-profitable companies, often recent IPOs, that are generating tremendous revenue growth.
The Market Is Key When Buying Robinhood Stocks
A key part of the CAN SLIM formula is the M, which stands for market. Most stocks, even the very best, follow the market direction. Invest when the stock market is in a confirmed uptrend and move to cash when the stock market goes into a correction.
The stock market pulled back following the latest news on interest rates, but has already rallied back. The broad S&P 500 and the tech-heavy Nasdaq both recently hit record highs. In addition, the Dow Jones Industrial has just retaken the key 50-day moving average.
The market has now moved back into a confirmed uptrend. Institutional selling has been modest, so investors should feel confident increasing their market exposure by purchasing top stocks. Do not forget to stay flexible, and maintain discipline in applying buying and selling rules however.
Now is a good time to be buying fundamentally strong stocks coming out of sound chart patterns. The stocks featured below are potential candidates.
But remember, as the past week showed, things can quickly change when it comes to the stock market. Make sure you keep a close eye on the market trend page here.
Best Robinhood Stocks To Buy Or Watch
Now let’s look at Google stock, Microsoft stock and PayPal stock in more detail. An important consideration is that these stocks are solid from a fundamental perspective, while institutional ownership is also strong. They are also part of the Robinhood Top 100 Stocks, the platform’s most popular stocks among traders.
They are also all members of IBD Leaderboard and IBD Long-Term Leaders.
Google parent Alphabet is in a buy zone after passing a 2,431.41 flat base buy point. It is actionable as high as 2,553.05. Shares have been trading just above or below the buy point for more than two weeks, usually tiny moves in below-average volume.
The relative strength line for GOOGL stock is around record highs. This gauges a stock’s performance compared to the S&P 500.
GOOGL stock has a perfect IBD Composite Rating of 99. That puts it in the top 1% of stocks tracked overall. Earnings outshine stock market performance, with its EPS Rating a top notch 94 out of 99.
Earnings have grown by an average of 50% over the past three quarters. This is double the 25% sought by CAN SLIM investors.
Analysts see strong growth ahead, with Google earnings per share expected to explode 65% in 2021, and then growing by a further 8% in 2022.
The tech giant has a Relative Strength Rating of 83. That means it has outperformed 83% of stocks tracked over the past 12 months in terms of price performance. Recent performance is strong, with Google stock rising around 40% so far in 2021. This far outstrips the S&P 500’s gain of just over 14%.
Big money has been snapping up Alphabet stock of late. This is reflected in its Accumulation/Distribution Rating of B-. This reflects moderate-to-heavy buying over the past 13 weeks.
Google stock was boosted after the firm posted first-quarter earnings and revenue that crushed analyst estimates. YouTube advertising revenue topped expectations, while the company also authorized additional GOOGL stock buybacks.
In the March quarter, Alphabet repurchased $11.39 billion of its GOOGL stock, up from $8.5 billion in the year-earlier period. Alphabet had roughly $4 billion left in a share repurchase program. The new buyback authorization brings that to about $54 billion.
The internet giant’s core search advertising business also continued to rebound, though the coronavirus pandemic still pressures sectors such as travel.
While Google has expanded into cloud computing and consumer hardware, digital advertising still makes up the lion’s share of revenue. Google announced in early March that it will stop employing web browser-tracking technology for the purpose of selling advertising. Earlier, Google said it would phase out third-party cookies.
Google plans to utilize “contextual” technology that enables advertisers to target aggregated groups of consumers with similar interests, such as travel, sports or fashion.
However the firm announced Thursday it is delaying its phaseout of third-party internet tracking cookies used by the advertising industry. In a blog post, Google said it would delay its phaseout until mid-to-late 2023. It had planned to end support for third-party cookies in its Chrome web browser in early 2022.
Microsoft stock is at the top of a buy zone after passing a new cup base buy point of 263.29, according to MarketSmith analysis. Shares have been trending higher of late, which is an encouraging sign.
The base was mostly formed above its 50-day moving average, though it dipped under it a couple of times. This is a positive.
In addition, the relative strength line for Microsoft stock recently hit consolidation highs, a positive sign, though it’s still below its all-time levels from last year. MSFT stock has gained around 22% since the start of the year. This also beats the S&P 500’s gain.
Microsoft is one of only four U.S.-listed stocks with trillion-dollar market caps. Last week it rose above the $2 trillion mark, but closed a hair below it Friday. It managed to retake the level on Monday. It is the second stock to achieve the feat, after old rival Apple (AAPL).
Microsoft stock has saw its IBD Composite Rating improve to a very strong, but not ideal, 93 out of 99. The Composite Rating is designed to give an instant overview of a stock’s fundamental and technical performance.
A key to Microsoft’s high score is its excellent earnings performance, which is reflected in its EPS Rating of 94. Microsoft earnings growth has accelerated for the past three quarters, reaching 39% in the most recent quarter.
Microsoft beat Wall Street’s estimates for its fiscal third quarter ended March 31 thanks to strong sales of cloud computing services. It also guided higher for the current quarter.
Wall Street see further growth ahead. Full-year EPS is expected to rise by 35% in 2021, and by 8% in 2022. Analysts have been upwardly revising these estimates.
One note of concern is the fact its Accumulation/Distribution Rating is sitting at D. This represents slightly more selling than buying over the past 13 weeks.
Nevertheless, institutional investors are big backers of Microsoft stock. In total, 40% of its stock being held by funds. It boasts eight consecutive quarters of increasing fund ownership.
Microsoft has just introduced Windows 11, the biggest upgrade to its PC operating system in six years. Windows 11, due for a release in time for the holiday shopping season, features a refreshed design with a new user interface and Start menu. It also provides PC performance improvements and integrates the Teams videoconferencing app. Windows 11 is the successor to Windows 10, which came out in July 2015.
Meanwhile, the firm’s successful pivot into cloud computing has been driving growth. It also benefited from the work-from-home and learn-at-home trends during the Covid-19 pandemic. Microsoft‘s cloud software and services are aiding at-home workers and students.
PayPal stock is just above a buy zone after clearing a smaller cup within a consolidation. The entry is 277.96, and it is actionable up to 291.85.
Investors could view 309.24, just above the Feb. 16 record high, as the official buy point. It currently sits just below this level. Ideally though, PYPL stock will go on to form a handle.
The relative strength line is improving, moving above the mid-April peak. It has some work to do to reach a new all-time high however. The payments stock has a long history of outperforming the broader market, a key reason why it is on the IBD Long-Term Leaders list. It’s also on Leaderboard.
PayPal stock has seen its Composite Rating come back strongly, and it now sits at a very strong 93. Stock market performance is improving, and it is now up around 25% so far this year.
Earnings are the stock’s key strength, with its EPS Rating coming in at 98 out of 99. EPS has grown by an average of 52% over the past three quarters. This reflects the current trend towards cashless transactions amid the Covid-19 pandemic.
When PayPal reported March-quarter earnings, revenue and total payment volume topping analyst estimates. EPS popped by 85% to $1.22 as e-commerce continued to boom amid the coronavirus pandemic. Revenue vaulted 31% to $6.03 billion. The strong results have been helping the stock advance.
Total payment volume processed from merchant customers jumped 50% to $285 billion. This was better than the $264.9 billion projected by analysts.
The company also said it added 14.5 million net new active accounts worldwide in the December quarter. Well known for its online checkout button, PayPal had 392 million active accounts worldwide as of March 31.
Meanwhile PayPal is looking into new growth avenues. It is now fighting it out with payments rival Square (SQ) in the cryptocurrency space. The two payment companies are marketing apps that let shoppers get discounts, make installments and buy cryptocurrencies.
PayPal‘s Venmo and the Square Cash App started off as person-to-person money-transfer services for family members and friends. Now they’ve evolved into broad consumer financial services apps fueling growth for these leaders in the burgeoning field of digital payments.
In late November, PayPal launched a cryptocurrency trading service, allowing clients to buy and sell Bitcoin. In addition, PayPal customers will also be able to use cryptocurrencies to shop at the 28 million merchants on its network starting in early 2021, the company said.
PayPal also announced cryptocurrency trading on Venmo. The new feature allows customers to use these three types of cryptocurrency, plus Bitcoin Cash, to view crypto trends and make transactions. The rollout has already started, and will be available for all customers directly in the Venmo app.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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