Stock market volatility was off the scales in 2020, but that didn’t seem to bother millennial investors one bit.
Online investing app Robinhood, which is perhaps best known for its commission-free trades, fractional-share investing, and gifting of free stock to new users, gained approximately 3 million new users last year. The average age of Robinhood’s users is only 31. As you might expect, young investors have a penchant for chasing momentum. Whether it’s penny stocks or high-growth plays, millennials and novice investors have packed Robinhood’s leaderboard (the 100 most held stocks on the platform) with these volatile and potentially risky companies. But amid these risky plays, Robinhood investors have also added a handful of value stocks to their portfolios. The following four Robinhood value stocks have the potential to make investors a lot richer in 2021.
Historically, social media leader Facebook (NASDAQ: FB) hasn’t met the traditional definition of a value stock, but things have changed.
Although Facebook remains a growth stock with annual double-digit sales growth, it’s also a value stock. Its price-earnings-to-growth ratio (PEG ratio) is below 1, and the company’s multiple relative to operating cash flow in future years looks to be well below historical norms. Aside from valuation, there are two key catalysts that make Facebook worth owning. First is the company’s penetration in the social media space. Facebook ended September with 2.74 billion monthly active users visiting its namesake website. If you include the other assets it owns, there were 3.21 billion monthly active people in the third quarter. Advertisers understand that there’s no other platform that offers access to an audience this large and targeted. Facebook’s ad-pricing power is unmatched in the social media space.
Another deeply discounted stock that can be found on Robinhood’s leaderboard is big pharma AstraZeneca (NASDAQ: AZN). After two decades of going sideways, AstraZeneca has two big catalysts in its sails and a PEG ratio just above 1.
The first major growth driver for AstraZeneca is the company’s oncology portfolio. Through the first nine months of 2020, cancer drug sales were up 23% to $8.2 billion, with blockbuster drugs Tagrisso, Imfinzi, and Lynparza leading the charge with respective year-to-date growth of 38%, 42%, and 51%. AstraZeneca has 172 projects currently in its clinical pipeline, with the vast majority of oncology studies focused on expanding the labels of its blockbuster trio. This is high-margin revenue with sustainable growth potential for years to come.
Want returns that value investors can bank on? Then consider buying shares of banking giant Wells Fargo(NYSE: WFC), which is valued at 80% of its book value. In general, bank stocks are considered a great value when you can scoop them up for less than their book value.
As you might imagine, there’s a reason Wells Fargo is this inexpensive. In addition to coronavirus pandemic concerns and low interest rates, which have weighed on its net interest income-earning potential, Wells Fargo is also attempting to put a scandal in the rearview mirror. This scandal saw 3.5 million unauthorized accounts opened between 2009 and 2016. Fortunately for Wells Fargo, consumers have a short-term memory when it comes to banking PR nightmares.